How to Buy Keyarch Acquisition Stock

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Contributor, Benzinga
January 25, 2022
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If choosing one word to describe the post-pandemic paradigm, most opinions would likely coalesce on disruption. From the classroom to the boardroom, down to the living room and even the bedroom, COVID-19 ignored all social constructs and barriers, freely imposing its will on everyone and everything.

Yet the irony of the pandemic is that the very spirit of disruption delivered the framework by which modern societies effectively sidestepped the worst of what the SARS-CoV-2 virus could have afflicted. While digitalization initiatives pushed “analog” workers to the shadows of irrelevancy, they also empowered mitigation efforts such as remote operation and on-demand delivery services.

As such, Keyarch Acquisition Corp. enters centerstage with ambitions to facilitate the next generation of disruptive technologies. However, it’s also jumping aboard during an unusually ambiguous time, presenting both potential rewards and high risks.

What is Keyarch Acquisition?

One of the many special purpose acquisition companies (SPACs) that have entered the public arena over the trailing two-year period, Keyarch Acquisition Corp. features no underlying operations. Instead, its main goal is to launch its own initial public offering (IPO) to raise funds for an eventual merger with a private enterprise. If successful, Keyarch will then be absorbed into the merger target’s identity.

Though the point about SPACs is that no one knows what the eventual merger will be until the disclosure announcement, Keyarch’s management team revealed that it intends to “target global disruptive technology and innovative services companies.” Desired regions include companies in developed economies such as the U.S., Israel and Southeast Asia.

Importantly, Keyarch declared that it will not seek a business combination with entities primarily operating in China (including Hong Kong and Macau).

When is the Keyarch Acquisition IPO Date?

Founded in 2021, Keyarch Acquisition initially filed its intent for an IPO with the U.S. Securities and Exchange Commission (SEC) confidentially on Sept. 2, 2021. Later, in early December of the same year, the SPAC revealed the terms of its $100 million offering.

On Jan. 24, 2022, Keyarch priced its IPO, which involves the distribution of 10 million units at $10 each. A unit consists of one share of common stock, one-half of a warrant (exercisable at $11.50) and one right to receive one-tenth of a share following the closing of a business combination. Under these terms, Keyarch will command a market value of $132 million.

Shares hit the IPO calendar on Jan. 25, 2022, listing on the Nasdaq exchange under the ticker symbol KYCHU. EarlyBirdCapital and Haitong Securities (PINK: HAITY) represent the joint bookrunners for the offering.

Though Keyarch seeks a game-changing partnership with its IPO, the potential disrupter could easily succumb to its own medicine during this volatile period. In particular, all eyes are on the Federal Reserve. At the start of the COVID-19 pandemic, the Fed applied the lesson it learned from its own history, injecting the economy with liquidity rather than stifling money flow. This action helped buoy confidence, with the government sending the message that it will backstop society if necessary.

However, with soaring consumer prices, the Fed now has the difficult task of easing away the monetary punch bowl. And doing so, it risks the repeat of another mistake. Between 1928 and 1929, the central bank decided to raise interest rates to “limit speculation in securities markets.” However, this “action slowed economic activity in the United States,” which then triggered recessions across the globe.

Thus, while the approach may seem right unto the central bank, the end thereof may be the ways of deflation. In fact, the Federal Reserve Bank of St. Louis noted that in the third quarter of 2021, money velocity — or the rate at which each unit of currency circulates in the economy — slipped to 1.115, just 1.4% above the all-time recorded low of 1.1.

For context, during the 1990s decade, the average money velocity was 2.048, a differential of 84% from where the metric currently sits. Unfortunately, raised borrowing costs will likely drop money velocity to record lows while staying the dovish course would exacerbate accelerated wealth inequities, among other critical problems.

Bottom line: prospective investors of KYCHU stock must conduct due diligence on the issuing company and broader market conditions.

Keyarch Acquisition Financial History

Because of its structure as a SPAC, Keyarch features no financial history other than the money it raises through its IPO. Following the proceedings, the funds will enter into escrow, where one of two actions will occur. Should Keyarch successfully complete a business combination, the raised funds will be integrated with the merger target’s finances. If unsuccessful, the SPAC will return the money to its shareholders.

Typically, SPACs have a two-year time window to identify and merge with a private enterprise. In this case, Keyarch set a limit of 18 months from the closing of its IPO to consummate a business combination.

Still, those interested in KYCHU stock should note that pre-merger-announcement shareholders can exit out of a proposed deal if they lack confidence in its viability. Such parties can redeem their holdings at the specified redemption rate (typically the initial offering price of $10). Interestingly and perhaps worryingly, The New York Times reported in December last year that SPAC redemption rates hit around 50%, well above 2020’s rate of 20%.

Again, due diligence is critical, especially if roughly half of SPAC investors would rather absorb opportunity costs than move through with a proposed business combination.

However, you must ultimately assess each investment under its own merits, and with Keyarch, the most compelling element rests with its relevant focus areas. Some of the company’s expressed market segments include the following:

  • Artificial intelligence (AI): According to Grand View Research, the global AI market size featured a valuation of $62.35 billion in 2020, with experts projecting sector revenue to hit nearly $1 trillion by 2028.
  • Autonomous driving: Per Facts and Factors’ research report, the global autonomous cars market size may grow from $23.33 billion in 2020 to $64.88 billion by 2026, representing a compound annual growth rate (CAGR) of 22.7% between 2021 and 2026.
  • 3D printing: Another report by Grand View Research indicates that the 3D printing market in total reached a value of $13.78 billion. By 2028, the sector could command a revenue of $62.79 billion.

While SPACs are not guaranteed to merge with an enterprise in their disclosed focus zones, KYCHU stock provides a credible upside narrative if Keyarch delivers on its promises.

Keyarch Acquisition Potential

Aside from the SPAC’s myriad viable industry segments, Keyarch can enhance its own risk-reward profile. For instance, merging with an American technology firm could yield predictable revenue streams and political stability. However, the cost would be limited upside potential, with the Bureau of Labor Statistics projecting modest growth over the next 8 years.

On the flipside, Keyarch can eschew certain reliability metrics for outsized growth. For instance, Bloomberg reports that Southeast Asia’s internet economy may hit $363 billion by 2025 and $1 trillion by 2030, per a separate article from Reuters. Such narratives are simply impossible to duplicate in a mature economy like the U.S., though again, they come with heightened dangers.

But before you make your final decision, you should realize that post-business combination SPACs have on average significantly lagged the performance of benchmark indices over the trailing year. Therefore, a measured approach to KYCHU stock may be necessary.

How to Buy Keyarch Acquisition IPO (KYCHU) Stock

Interested investors of KYCHU must acquire shares at the open, necessitating knowledge in how to buy stocks. Below is a quick refresher.

Step 1: Pick a brokerage.

Because the best brokers tend to compete on similar incentives, focus your energy on finding the platform that ideally fits your needs.

Step 2: Decide how many shares you want.

IPOs are risky, and SPACs have proven particularly volatile. Therefore, if you engage, choose a balanced share count.

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).

KYCHU Restrictions for Retail Investors

Review the Financial Industry Regulatory Authority (FINRA) rules on restricted persons before participating in an IPO. Don’t engage if you have privileged information.

KYCHU Pre-IPO

Unfortunately, no pre-IPO opportunity is available for KYCHU stock.

Disrupter or the Disrupted?

Although the COVID-19 pandemic upturned the modern world order, advanced technologies allowed developed economies to navigate troubled waters. That’s the allure of disruptive innovations, yet investors must be careful to recognize the unprecedented dangers that societies face in the new normal.

Frequently Asked Questions

Q

When did Keyarch Acquisition IPO?

A

Keyarch Acquisition IPOed as a special purpose acquisition company (SPAC) on January 25, 2022.

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.