The smart phone didn’t just kill corded telecommunications platforms — it may have just about ended the reign of the physical wallet. Nowadays, people think nothing about leaving their cash at home, knowing full well that they can pay for whatever they want with their mobile devices.
From requesting and making payment arrangements with ride-sharing apps to placing an order for that piping hot pizza to be delivered just when you want it, integrated digitalization is ubiquitous.
Underlining this cashless ethos is an innovation called embedded finance or the imbuing of financial technology (fintech) to any service platform, especially nonfinance-related businesses. Essentially, embedded finance providers are steadily breaking up the hegemony of the big banks, creating new opportunities for consumers and investors.
One such prospect on Wall Street is Home Plate Acquisition, a special purpose acquisition company seeking to merge with an embedded fintech provider. It just filed for an initial public offering (IPO), providing retail buyers a chance to jump on the trade.
When is the Home Plate Acquisition IPO Date?
Under the traditional paradigm, an IPO leaves many retail investors out in the cold. When an enterprise with public market ambitions embarks on a road show — or a meeting with potential investors to drum up interest in the equity offering — it almost always has institutional players like mutual funds in mind.
Rarely does a company seek out individual investors for a piece of the IPO pie — unless of course if these persons are incredibly affluent. Otherwise, the average investor must wait for shares to hit the open market. By then, the stock in question could have jumped substantially higher due to market hype, a phenomenon called the IPO pop.
While SPACs certainly have their fair share of criticisms — most notably their underperformance following the completion of their business combinations — one major attribute is their fostering of democratization. Once the Securities and Exchange Commission gives the green light for a SPAC to enter the public market, anyone can acquire its shares.
From that point, SPACs, which are also known as shell companies or blank-check firms, have approximately two years to identify a merger target. Since these special corporate vehicles feature no underlying operations, they must find an enterprise that does. A SPAC merger is basically a mutually beneficial partnership — the target provides the business while the shell company offers access to public capital.
You might hear the term “reverse merger” to describe the above combination. That’s because a SPAC provides a private enterprise with a backdoor route to an IPO, bypassing certain onerous vetting procedures that “regular” IPO candidates must endure.
Regarding Home Plate Acquisition, management filed its offering proposal with the Securities and Exchange Commission on September 3, 2021. The company plans to offer 20 million shares, with an additional overallotment of 3 million at $10 per share for a total raise of $230 million.
As a freshly filed prospectus, Home Plate does not yet have a date on the IPO calendar. If approved, shares will trade on the Nasdaq exchange under the ticker symbol HPLTU.
Home Plate Acquisition Financial History
As a blank-check firm, Home Plate Acquisition has zero operations. Therefore, the only financial data the company will feature is the amount raised in the offering. Following the proceedings, management will secure this tally in a trust account, where it will either be transferred to the target enterprise following an approved business combination or redistributed back to HPLTU shareholders if a merger does not occur in the specified time frame.
Still, this formality doesn’t necessarily mean that prospective buyers of HPLTU stock are flying completely blind. According to Home Plate’s prospectus, the SPAC is targeting the fintech sector and specifically embedded finance providers as a potential merger candidate. If so, Home Plate has certainly done its homework as this subsegment could be one of the most important for the economy in the years ahead.
According to a recent analysis from Juniper Research, the “value of the embedded finance market will exceed $138 billion in 2026, from just $43 billion in 2021. Embedded finance occurs when financial services are embedded within nontraditional financial services areas, such as banking services within a ridesharing app, or insurance services within an e-commerce checkout process. The market value includes insurance premiums, transaction revenue and licencing costs.”
Driven by communication application programming interface (API) protocols, the ability for end-user devices to communicate with myriad other applications and platforms seamlessly will accelerate the cashless movement that’s already been years in the making. Through Home Plate’s target acquisition, the enterprise could potentially connect more service sectors to fintech solutions, thus enabling their customers to pay their bills without having to fumble around with third-party vendors.
Indeed, the ability for consumers in the digital age to integrate all their ordering and payment-processing needs under a single platform is so vital that Lightyear Capital projects that in 4 years from now, the embedded finance market could reach a valuation of $230 billion. And in 10 years, it could catapult to $7 trillion — and that’s no typo!
Home Plate Acquisition Potential
By now, the potential for HPLTU stock is patently obvious. If Home Plate’s target enterprise could grab even a modest share of Lightyear’s projected market size of the embedded fintech sector, shares of the SPAC combination could launch into low-earth orbit.
Because of the addressable market’s size, Home Plate could be like buying Apple (NASDAQ: AAPL) or Microsoft (NASDAQ: MSFT) when they were penny stocks.
Moreover, the embedded finance industry in general could help address the unbanked problem in the U.S. and perhaps around the globe. According to the 2019 FDIC Survey of Household Use of Banking and Financial Services, 5.4% of U.S. households were unbanked. Further, economic pressures stemming from the COVID-19 pandemic will almost surely lift this statistic. But by providing nonfinancial companies with finance capabilities, the unbanked population will still be able to connect commercially and economically.
Nevertheless, prospective buyers of HPLTU stock should be careful about jumping on this SPAC. As a merger candidate has not been identified, you risk holding up your capital for a possibly lackluster opportunity. Ultimately, it’s best to only wager what you can comfortably afford to lose.
How to Buy Home Plate Acquisition IPO (HPLTU) Stock
As a fresh-off-the-press IPO proposition, Home Plate is what you might refer to as a Forrest Gump SPAC — you never know what you’re going to get. If the merger candidate turns out to be a high-potential entity, there’s no telling what plateau HPLTU stock will reach. On the other hand, a less-than-illustrious name could see you holding up your investment dollars that you could have put to better use elsewhere.
However, SPACs are accessible in that once greenlit, you can acquire them as any other equity unit. If you already know how to buy stocks, you can start trading right away. If not, follow the steps below.
Step 1: Pick a brokerage.
With online brokerages now offering virtually identical financial incentives such as commission-free trading, you should focus your search for the best brokers on platforms that give you the attributes you care the most about.
Step 2: Decide how many shares you want.
While all market investments carry risk, IPOs are especially vulnerable to wild swings. Therefore, it’s imperative that you elect a balanced share count, one that can provide gains on the upside but will limit your losses if your thesis doesn’t pan out.
Step 3: Choose your order type.
Before placing your first order, familiarize yourself with these market concepts.
- Bid: The bid is the price you sell securities to the broker.
- Ask: The ask is the broker’s price demanded if you’re buying a particular stock.
- Spread: The difference between the bid and ask price, the spread also signals market liquidity and risk. Firmer spreads imply higher liquidity and lower risk due to ample participation, while wider spreads entail higher risk due to lower volume.
- Limit order: Trade requests at a specific price, limit orders offer transparency but no execution guarantees.
- Market order: Conversely, market orders ensure fulfillment but only at the current rate, which fluctuates to market forces.
- Stop-loss order: A defensive mechanism, a stop-loss order automatically exits your position at either a predetermined price or anything lower.
- Stop-limit order: Stop-limit orders provide automated protection by only exiting at a predetermined price. However, such orders carry the same nonfulfillment risk as limit orders.
Step 4: Execute your trade.
To execute a market order, follow these steps:
- Select your action type (buy or sell).
- Enter the shares you want to acquire (or sell).
- Hit the Buy (or Sell) button.
Follow the same sequence for limit orders (but include your execution price).
HPLTU Restrictions for Retail Investors
Review the Financial Industry Regulatory Authority (FINRA) rules on restricted persons for any questions about improprieties. In short, you cannot illicitly trade on privileged information.
For serious participants of traditional IPOs, you should consider opening an account with ClickIPO, a company that buys shares of select enterprises seeking to go public for the ultimate purpose of distribution to interested members.
A Blind Bet in a Relevant Market
Admittedly, the theme around Home Plate Acquisition is ambiguity. As a freshly proposed IPO, shares of the SPAC haven’t begun trading yet at time of writing. Still, the embedded finance sector will likely catapult higher, drawing almost unparalleled intrigue for HPLTU stock.