Retail investors love a good story for stocks, as well as love the opportunity to get into some potential growth stories on the ground floor. SPACs were one of the hottest stories in 2020 and 2021 but have fallen out of favor with many companies trading well below the $10 price after mergers have been completed.
Could a SPAC deal involving two of the biggest names bring life back to SPACs and how many coincidences do there have to be before it's considered research?
What Happened: During the height of SPACs, something often done by retail traders was connecting the dots between potential acquisition targets. This included seeing connections between board members, investments by the sponsors previously and even tracking where private jets were headed. The effect is now spilling over to two SPACs from a popular name in the space.
Chamath Palihapitiya was considered one of the biggest players in the SPAC industry for years but has gone relatively quiet and has also seen the value fall for the companies he took public. Could a deal with one of the biggest private companies revive him as a top name in SPAC land?
The Social Capital Hedosophia Holdings Corp IV IPOD and Social Capital Hedosophia Holdings Corp VI IPOF are two of the most well-known SPACs and were part of a string of six SPACs with the IPO name in the ticker launched by Palihapitiya.
Recent chatter has been picking up online that the two SPACs could combine and help bring Starlink public. Starlink is the satellite unit owned by SpaceX, a company run by Tesla Inc TSLA CEO Elon Musk, which was valued at $100 billion last year.
Disclosure: The author is long shares IPOD, IPOF and SPCE.
Related Link: 5 Things You Might Not Know About Chamath Palihapitiya
Connecting the Dots: Given the size of the two SPACs from Palihapitiya, they have always been linked to big targets in the private market. Recent filings have also included language that the two SPACs could combine to fund one target. The two SPACs rose $400 million (IPOD) and $1 billion in their original offerings.
Several prominent SPAC accounts including Jonathan Michael who goes by LeaderSPAC on Twitter have been following the saga and connecting the dots.
Michael pointed out recently several trips made by Palihapitiya’s private jet and noted the volume in shares of Social Capital Hedosophia Holdings VI rose on the same day. Options flow has also been increasing over the last few weeks in both IPOD and IPOF.
Palihapitiya previously took Virgin Galactic Holdings Inc SPCE public and served as the chairman. While Virgin Galactic isn’t a pure rival to SpaceX, there are some similarities that might have made it hard for Palihapitiya to be on the boards of both.
Palihapitiya stepped down as the chairman of Virgin Galactic and also sold his personal stake in the company. The decision was made to “focus on other public company board commitments.”
Like Musk, Palihapitiya has been known to leave cryptic clues for followers. One clue in September 2021 pointed to a watch that Palihapitiya was wearing. The investor told a follower to look at the watch, which has a similar look to Starlink.
There was also the Social Capital Twitter banner photo randomly being changed to a background that matched the color and layout of the banner photo for SpaceX’s Twitter account.
Anyone who has listened to the “All-In Podcast” that features Palihapitiya may have caught more potential clues about a huge deal being announced and a big guest coming. While the show is on episodes in the 70s, episode 69 was skipped over as it is reserved for a special guest.
Many are familiar with Musk’s love of the numbers 69 and 420 for memes and being used in potential buyouts of companies.
“We will have a very special guest, he’s either going on episode 69 or 420,” the show previously said.
While the hosts of the podcast widely discussed the conflict in Ukraine, one topic that was never brought up was discussing the help from Musk by providing Starlink satellites.
Starlink was also not mentioned during Musk’s recent TED interview. While it could be a coincidence, it could also signal that there’s more of a quiet period of discussing too many details of Starlink.
Some listeners of the podcast may have also caught Palihapitiya saying he was in Italy for a rich friend’s birthday party with hints of Musk but could not discuss the details.
The hosts of the “All-In Podcast” are holding a live event in Miami, May 15 to May 17, with a wide range of speakers. Musk was quietly added to the list on Monday night without an announcement by any of the hosts or Musk, which seemed odd for a big guest like this.
Will Starlink Go Public: Investors and Tesla fans have eagerly awaited the potential of a SpaceX or Starlink public listing.
Musk has never ruled out taking the companies public and the most recent comments were about waiting until the company was generating predictable revenue.
Comments from Musk have always hinted at allowing retail investors the option to buy shares of SpaceX or Starlink first. While a SPAC merger wouldn’t officially accomplish this, it would allow investors the chance to buy into the SPAC to get access and not have to worry about the traditional bankers facilitating an IPO deal that typically rewards big money first before retail investors get a stab at shares.
Alphabet Inc GOOGGOOGL is an investor in SpaceX that could benefit from a public listing and a potential increased valuation for the space company. The $100 billion valuation given to SpaceX in 2022 also saw Musk’s personal wealth rise and take him to new heights in the fall of 2021 when he was worth over $300 billion.
Many expect Starlink to go public before SpaceX and a SPAC could be the way to make this happen sooner than later.
Photo: Courtesy SpaceX, Starlink Launch, video screenshot
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