BurTech Acquisition Stock

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Contributor, Benzinga
December 13, 2021
$10.52
-0.11[-1.03%]
Last update: 9:27AM (Delayed 15-Minutes)
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Open-Close-Vol / Avg.1.000 / 6.000Mkt Cap-Day Range- - -52 Wk Range10.210 - 11.510

Many years from now, history may regard as one of the underlying themes of the COVID-19 pandemic the concept of coerced paradigm shifts. Prior to the global health crisis, the U.S. and many western countries prided themselves in fostering individualism. While a noble goal in many respects, University of British Columbia political science professor Dr. Yves Tiberghien argues that the philosophy of unity and cohesion better prepared East Asian countries against the pandemic.

Specifically, Dr. Tiberghien emphasized that horizontal trust within society — an attribute strongest in East Asia, Oceania, Nordic countries and India — facilitated willingness in these populations to accept mitigation measures such as mask wearing and contact tracing. In other regions where individual rights supersede community-wide concerns, efforts to turn the tide against the SARS-CoV-2 virus encountered significant friction.

However, these sociological dynamics weren’t the only paradigms that rudely throttled pre-pandemic norms. Indeed, one of the biggest changes to American society was the rise of economic decentralization. With advanced technologies, people technically no longer needed to be tethered to a centralized work environment. Instead, they could conduct operations wherever internet was available.

Such a radical rethink in the professional sector could help companies levered to the next generation of connectivity solutions, boding well for the initial public offering (IPO) of BurTech Acquisition Corp.

When Did BurTech Acquisition IPO?

Although American consumers — along with the rest of the global community — had to quickly adapt to the new normal, this disruption didn’t blunt demand for investing opportunities. Quite the contrary, U.S.-based IPOs have totaled over $300 billion this year, with only a few weeks left in 2021. Yet enterprises seeking public funds appear determined to send off this remarkable period with a bang.

BurTech Acquisition made its debut on the IPO calendar on Dec. 13. Per its prospectus with the U.S. Securities and Exchange Commission (SEC), BurTech intends to raise $250 million through the distribution of 25 million units at a per-share price of $10. Each unit consists of one share of common stock and one warrant, which is exercisable at $11.50.

EF Hutton provides the sole bookrunning service for the IPO. BurTech granted the underwriter a 45-day option to purchase an additional 3.75 million units at the initial offering price to cover any overallotments. Shares will list on the Nasdaq exchange under the ticker symbol BRKHU.

As you can deduce from the corporate name, BurTech Acquisition is a special purpose acquisition company (SPAC). Traditionally, private enterprises seeking to expand their reach launch their own IPO, generating an extensive vetting process before realizing their goal. On the flip side, SPACs have no underlying operations. Instead, they raise money through an IPO to fund a merger with a company that (hopefully) does have a viable business.

Why would private firms agree to such an arrangement? Primarily, SPAC-based IPOs facilitate a quicker channel to the public market, in large part because they sidestep much of the onerous due diligence involved in traditional IPOs. Such a methodology favors SPAC sponsors — who typically receive 20% equity in the eventual business combination — and the merger targets.

But does this arrangement favor the regular retail investor? It’s debatable.

On the optimistic end, SPACs provide near-ground floor opportunities to the average Joe and Jane investor. For many, SPACs (also called blank-check firms or shell companies) are about as close as you can get toward accessing private-equity prospects.

But on the other end, the lack of oversight relative to standard bread-and-butter IPOs presents significant challenges for regular investors. Most concerningly, the dilutive effect of SPAC-fueled business combinations have resulted in underperformance against benchmark indices this year.

Ultimately, prospective buyers of BRKHU stock must practice careful money management.

BurTech Acquisition Financial History

Being a shell company, BurTech Acquisition offers no real financial history other than the intended $250 million raise — or approximately $287.5 million if the underwriter exercises its overallotment option in full. Indeed, it may be in your best interest to sideline a SPAC if you happen to have more information than you should.

Although SPACs have garnered a less-than-sterling reputation over the trailing two years, their sponsors must follow securities laws to a T. In part, this concept means no party should have any idea what business a SPAC will merge with prior to the time of its IPO. As Benzinga staff writer Chris Katje mentioned, allegations of pre-arranged dealings represent one of the biggest legal challenges to Digital World Acquisition Corp. (NASDAQ: DWAC).

However, a blackout on revealing information prior to a merger announcement doesn’t mean you can’t gather clues to what a SPAC’s management team is thinking. According to BurTech’s prospectus, the company seeks an enterprise related to the retail, lifestyle, hospitality, technology and real estate markets.

To be fair, that description is a mouthful and could cover myriad industries. Also, many modern firms feature intersecting specialties, making an identification of a possible target extremely difficult. Factor in that SPACs are not bound to their disclosed intentions, and you have yet another reason to practice strict money management.

Still, SPACs recruit executives to leverage their acumen and industry connections to foster a successful business combination. That’s why you’re not going to see too many shell companies color outside the lines; otherwise, those recruits may find themselves operating away from their specialized disciplines.

Regarding BurTech, most of the executives have real estate management or hospitality-related experience, which ties into one of the SPAC’s stated merger goals. However, BurTech also features influential individuals with internet connectivity and blockchain expertise, adding an intriguing layer to BRKHU stock.

According to MarketsandMarkets.com, the blockchain market will reach a valuation of $4.9 billion by the end of this year. However, industry analysts project that by 2026, the segment will hit $67.4 billion, representing a compound annual growth rate (CAGR) of 68.4% during the forecast period. Quite simply, few industries can match a CAGR of nearly 70%, especially in a five-year span.

Therefore, it’s probably no coincidence that BurTech recruited so many blockchain specialists. The growth is truly out of this world.

BurTech Acquisition Potential

Every company seeks to maximize its share of its underlying total addressable market. Simplistically, management has two choices: aggressively spend to be a big fish in a big pond or make do by being a small fish in a small pond. With the blockchain, though, early innovators have a chance to be an apex predator in the world’s biggest ocean.

According to Grand View Research, its experts project the global blockchain technology market to reach a valuation of $394.6 billion: “High investments in blockchain by leading banks and other financial institutions have led to various advancements in technology, thereby improving efficiency.” And this efficiency can translate across multiple applications, including retail, real estate and BurTech’s other focus areas.

At the same time, BRKHU stock is not without risks. Assuming BurTech combines with a blockchain-related enterprise, the underlying innovation doesn’t (ironically enough) have full consensus regarding its utility. For instance, an op-ed from The New York Times described how centralized sources are able to mitigate the nuanced ecosystem of digitalization.

How to Buy BurTech Acquisition (BRKHU) Stock

With BurTech Acquisition shares already launching, interested investors must acquire shares at the open, necessitating knowing how to buy stocks. If you need a refresher, follow the steps below.

Step 1: Pick a brokerage.

Everything begins with a brokerage, and the benefit today is that most offer similar financial incentives to join. Therefore, narrow your best brokers to platforms that most suit your needs.

Step 2: Decide how many shares you want.

IPOs are always risky, and SPACs tend to raise blood pressure. Therefore, choose a balanced share count to mitigate possible downside.

Step 3: Choose your order type.

Before trading, learn these market concepts.

  • Bid: The buyer’s best offer for a stock.
  • Ask: The seller’s lowest acceptable price.
  • Spread: The difference between the bid-ask price, the spread indicates market risk as this is also the profit margin for market makers.
  • Limit order: Buy or sell requests at a predetermined price, limit orders provide transparency but no execution guarantees.
  • Market order: Market orders guarantee fulfillment but only at the current rate.
  • Stop-loss order: Stop-loss orders automatically exit your position at either a predetermined price or anything lower.
  • Stop-limit order: Stop-limit orders only leave positions at a specified price, but they also carry non-fulfillment risks.

Step 4: Execute your trade.

Follow these steps to execute a market order:

  1. Select your action type (buy or sell).
  2. Enter the shares you want to acquire (or sell).
  3. Hit the Buy (or Sell) button.

Follow the same sequence for limit orders (but include your execution price).

About Joshua Enomoto

His distinct writing style of distilling convoluted data into relatable and compelling narratives has earned him recognition among several investment-related publications.