SPACs aren’t new. Their rise and fall are a clear case of market memory loss. From 2020 to early 2021, special purpose acquisition companies exploded into the spotlight. Hundreds launched, raising over $160 billion. They were sold as a faster, more flexible alternative to IPOs, a way to take private companies public without the regulatory drag. But underneath the surface, most were hype machines. Celebrities joined the party. Shaquille O’Neal. Jay-Z. Even former House Speaker Paul Ryan. Their names were plastered on term sheets while pre-revenue companies were rushed into the market and pitched as the next Tesla or Amazon. Few investors stopped to ask the obvious: why were these companies avoiding the standard IPO route?
By late 2022, the bubble had burst. SPACs that once traded at premiums dropped below their $10 NAV floors. Goldman Sachs reported that 77% of post-merger SPACs from the 2020–2021 class traded below their issue price within a year. High-profile failures like Nikola and Lordstown Motors burned a lot of capital and credibility. These companies weren’t just struggling for scale or profits; some barely had functioning products. And yet, retail investors piled in, drawn by slick investor decks and the promise of early access.
