Around this time last year, President Joe Biden signed an executive order that set in place the early framework to raise the minimum wage for federal workers and contractors to $15 an hour. Though a popular idea among members of his party and the public, the issue naturally creates controversy, especially among those arguing that such wage hikes hurt smaller businesses who find themselves competing with the government.
Indeed, any proposal regarding the minimum wage has never not met rigorous political and ideological opposition. Ironically, though, the back and forth obfuscates a deeper truth. As the Institute for Policy Studies noted, the myriad disruptions that the COVID-19 pandemic imposed skyrocketed the wealth of American billionaires to the tune of a 62% increase. Subsequently, the U.S. is richer but strangely poorer at the same time.
One of the consequences of this imbalance in wealth distribution may be the deteriorating money velocity or the rate at which each unit of currency circulates within the economy. Since 1997, this metric has been trending inside a decidedly bearish trend channel, the implication being that growth opportunities in the U.S. may be waning. Mathematically, too much wealth is concentrated in too few hands.
While many countries share similar challenges, investors may find going abroad provides higher return potential, perhaps driving the case for Technology & Telecommunication Acquisition Corp.
What Is Technology & Telecommunication Acquisition?
Structured as a special purpose acquisition company (SPAC), Technology & Telecommunication Acquisition does not feature an underlying operation. Instead, its purpose is to launch an initial public offering (IPO) to raise funds to support an eventual merger with a private enterprise. In this case, the SPAC intends to focus on the namesake industries in Malaysia, with a possible eye toward 5G-integrated solutions, particularly involving the global electric vehicle (EV) rollout.
According to the company’s IPO prospectus filed with the U.S. Securities and Exchange Commission (SEC), Technology & Telecommunication seeks “to acquire companies with enterprise values of between $100 million and $500 million that are preferably already cash generative.” Specifically, it “will not consummate a business combination with a target business located in China or Hong Kong and Macau.”
When Is the Technology & Telecommunication Acquisition IPO Date?
One of the early hopefuls of the new year, Technology & Telecommunication Acquisition made its debut on Jan. 18, at the start of the holiday-shortened third week of 2022. Shares debuted on the Nasdaq exchange under the ticker symbol TETEU. Each unit consists of one Class A common stock and one warrant, redeemable at $11.50 per share.
Under the terms of the deal, Technology & Telecommunication distributed 10 million shares at $10 each, subsequently raising a gross value of $100 million before deducting expenses related to the IPO. At this specified size, the SPAC commands a market value of $130 million. EF Hutton represented the sole bookrunner.
Though any IPO presents concerns about the unknown, TETEU stock, in addition to standard variables, also features distinct timing risks. Primarily, the appetite for new listings remains up for debate. True, proponents will argue that 2021 has been a blistering, record-smashing year for public market debutantes, with U.S.-based IPOs ringing up a total valuation exceeding $301 billion. Globally, this enormous figure expands to over $594 billion.
Still, as Harper College reminds investors, economics involves the study of how societies distribute limited resources to obtain maximum satisfaction of unlimited human wants. Whether one ponders engagement of bull markets in IPOs, cryptocurrencies, growth stocks, real estate or any number of enticing sectors, it pays to keep this basic knowledge in mind. No market can sustain explosive growth indefinitely since fueling catalysts eventually fade.
Another aspect to include in your due diligence for TETEU stock is the Federal Reserve. Concerns about soaring consumer prices have weighed heavily on the world’s most powerful central bankers, which, as Benzinga staff writer Wayne Duggan argued, could result in a sooner-than-anticipated interest rate hike. In principle, raising the cost of borrowing money should temper inflation.
However, a transition from a dovish (loose) to hawkish (tight) monetary policy disincentivizes risk, potentially causing a large-scale shift to risk-off assets. While this dynamic is a basic danger for any IPO, the rotation may be especially problematic for TETEU stock because of relative international currency strength.
Essentially, a weak dollar may invigorate foreign currencies while the opposite may be true for a rising dollar. Such a reversal in strategy could create unintended consequences, especially for companies tied to international markets.
Technology & Telecommunication Acquisition Financial History
As a SPAC (also known as a shell company or blank-check firm), Technology & Telecommunication has no financial history other than the amount it raised in its IPO. Once the offering closes on Jan. 20, the funds will enter into a trust account, similar to escrow in real estate transactions.
Upon identifying a merger target, TETEU shareholders have the opportunity to vote on whether or not to approve the proposed business combination. Dissenting shareholders can elect to redeem their shares at the specified redemption rate (usually $10 for SPACs) and thus exit the deal.
Conspicuously, The New York Times reported in December 2021 that SPAC redemption rates up to the point of publication lingered around 50%, up substantially from 20% in the prior year. That so many investors were willing to absorb an opportunity cost rather than move ahead with intended mergers is a major risk factor for SPAC-based IPOs.
Nevertheless, you may tilt the odds in your favor by narrowing your list of shell companies to those focused on high-potential markets. Malaysia, the regional target for Technology & Telecommunication, is certainly one of them.
According to The World Bank, the “Malaysian economy is projected to expand by 5.8 percent in 2022, as domestic and external demand recovers.” In contrast, The Conference Board estimates that the U.S. economy “will grow by 3.5 percent (year-over-year) in 2022 and 2.9 percent (year-over-year) in 2023.” While investing in the new normal may feel like throwing darts at distance, Malaysia at least provides a wider target.
Regarding the SPAC’s specific focus, ResearchAndMarkets.com stated that the “Malaysian telecommunications market is a thriving mobile market with four large network operators, an incumbent fixed-line provider with near-monopoly and the overall market underpinned by strong economic fundamentals, albeit some political uncertainties.” The research firm anticipates Malaysia’s 5G subscriber count to hit 15.5 million by 2026.
Better yet, advanced telecommunication infrastructure buildouts facilitate synergies with groundbreaking innovations, such as smart-city-linked EVs. Here, the prospect is tempting, with Malaysia’s nascent EV market still in the early stages of development.
Technology & Telecommunication Acquisition Potential
Because SPACs are essentially a blind trust in the competencies of their leadership team, you’ll want to allocate some of your due diligence time to the executives running the show. With TETEU stock, the investment is undergirded by Tek Che Ng, chairman and CEO, and Chow Wing Loke, CFO.
Both corporate officers command extensive experience in sales, business development and acquisitions. Loke in particular served as Motos America Inc. (OTCMKTS: WECT), which under its former name WeConnect Tech International Inc., started as an information technology and e-commerce/payment solutions firm before transitioning into oil and gas.
While the execs undoubtedly have the acumen to secure a deal, what that deal may be is a cause for concern. If you check out Motos America, you’ll notice that its shares could very well be listed among the best penny stock trading apps. Though that might appeal to some investors, it’s arguably too risky for most.
How to Buy Technology & Telecommunication Acquisition IPO (TETEU) Stock
Interested investors of TETEU may acquire shares at the open, thus requiring knowledge in how to buy stocks. Below is a quick guide.
Step 1: Pick a brokerage.
With the best brokers competing on similar incentives, take the time to assess which platform ideally suits you.
Step 2: Decide how many shares you want.
IPOs are risky, and SPACs tend to hold up your money. Therefore, 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:
- 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).
TETEU 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.
No pre-IPO access is available.
Going Abroad for Profits
With the mature U.S. economy providing relatively few opportunities for growth-starved speculators, the Malaysia-focused TETEU stock could be a viable solution. Nevertheless, stability can be its own reward as greater potential often correlates with higher risk.