Though investing in the stock market represents among the easiest ways to build wealth, acquiring shares of blue-chip giants typically doesn’t offer the greatest wealth potential. But participating in an initial public offering (IPO) for retail investors comes at a cost because they usually can’t buy shares at their initial offering price.
But that’s the appeal for special purpose acquisition companies (SPACs) like Waverley Capital Acquisition 1 and the subsequent Waverely Capital stock, which seeks to combine with a media, technology or entertainment enterprise. By buying shares before the company makes its merger-target announcement, investors are on equal footing with privileged buyers of traditional IPOs and stocks.
When Did Waverley Capital IPO?
Waverey Capital IPO’d on August 20, 2021.
Waverley Capital Financial History
As previously mentioned, Waverley Capital has no underlying business. Therefore, betting on WAVCU stock represents a vote of confidence in Daniel V. Leff, Ph.D, and Edgar Bronfman Jr., CEO and chairman of the board of directors for Waverley sponsor WCAC1, respectively.
Though no one can say for certain which companies Waverley is considering for a reverse merger, the SPAC’s prospectus discloses that it seeks to acquire a business focused on media, technology or entertainment. Admittedly, that too doesn’t tell investors much. But further clues exist regarding the sponsors’ professional experience.
Leff and Bronfman previously invested in companies such as Roku (NASDAQ: ROKU), fuboTV (NYSE: FUBO) and Pluto TV — which ViacomCBS (NASDAQ: VIACA) later acquired — among many others. Interestingly, the pair also invested in Matterport (NASDAQ: MTTR), a virtual tour software platform which went public via a SPAC merger. Subsequently, MTTR stock is up over 29% since its debut. Therefore, Waverley features dealmakers with a track record of success.
From Waverley’s prospectus, Bronfman supported the foundation of Warner Music Group (NASDAQ: WMG) and Universal Studios, serving as chairman and CEO of Warner Music and CEO of The Seagram Company, the former parent company of Universal Studios.
For anyone interested in buying Waverley shares before the underlying firm identifies a potential merger target, you should be prepared for a high-growth profile with questionable profitability potential should the SPAC acquire a media entertainment company. For instance, Roku, fuboTV and Warner Music Group all enjoy robust growth trajectories. Where the competitive separation will occur, though, is in the bottom line.
Roku is finally on its way to profitability after multiple consecutive years of net losses. Warner will likely join Roku, posting positive net income between the fourth quarter of 2020 and the second quarter of 2021. Unfortunately, fuboTV is the odd man out, which has been worryingly posting widening net losses.
In addition, once “the securities comprising the units begin separate trading,” the common shares and warrants traded under the tickers WAVC and WAVCW, respectively. Evercore (NYSE: EVR) and Morgan Stanley (NYSE: MS) serve as joint bookrunning managers for this IPO.
From here, Waverley Capital will have approximately 2 years to identify an enterprise for a merger. Should shareholders approve the business combination, the SPAC will assume the identity of the target enterprise, with the ticker symbol also changing to reflect the merged entity’s brand.
Waverley Capital Potential
Although outsiders are clueless regarding Waverley Capital’s potential merger targets, WAVC stock itself has generated enormous interest in terms of search engine inquiries and social media buzz — all for good reason. Audiences (particularly younger people) clamored for streaming content services prior to the COVID-19 pandemic and the public health crisis only accelerated this trend.
According to Fortune Business Insights, the global over-the-top (OTT) streaming services market commanded a valuation of $38.77 billion in 2020. Particularly, the “global impact of COVID-19 has been unprecedented and staggering, with OTT services witnessing a positive demand shock across all regions amid the pandemic.” And due to the sharp rise in new infections from the delta variant, the online content sector could draw in even more audience growth.
To be fair, pent-up demand for consumers who missed out on various social experiences last year will likely amplify their spending and activities this year. But thus far, physical entertainment options have not quite benefitted from the rebound. For example, cineplex operator Cinemark (NYSE: CNK) posted revenue of $295 million in Q2 2021, down a staggering 69% from Q2 2019 (pre-pandemic) results.
But before you get too confident, Waverley’s success will depend on the specific business involved. Circling back to fuboTV, demand for live sports does not appear robust, especially as esports and other relevant digital entertainment options compete for eyeballs.
How to Buy Waverley Capital (WAVC) Stock
If you already know how to buy stocks, you can participate right away. If not, follow the steps below.
Step 1: Pick a brokerage.
Look at all the options offered by brokers on your radar, but don’t settle until you’re happy with the service and value you get. Therefore, you can narrow your choice of best brokers based on attributes most important to you.
Step 2: Decide how many shares you want.
Whether SPAC or not, stocks are risky. You can best mitigate the downside threat by choosing a balanced share count, one that will give you ample rewards if the wager pans out but won’t hurt you if it doesn’t.
Step 3: Choose your order type.
Before jumping aboard, familiarize yourself with these market concepts.
- Bid: The maximum price a buyer will offer, the bid is always lower than the ask.
- Ask: The minimum price a seller will accept, the ask is always higher than the bid.
- Spread: The bid-ask price variance, the spread also connotes market liquidity and risk. Narrower spreads indicate higher liquidity and lower risk from greater participant interest, while the opposite principle applies for wider spreads.
- Limit order: To buy (or sell) stocks at a specific price, choose limit orders, which offer transparency but no execution guarantees.
- Market order: In contrast, you can guarantee fulfillment via market orders but only at the current rate, which may fluctuate during order processing.
- Stop-loss order: A defensive function for your portfolio, a stop-loss order automatically exits your position at either a predetermined price or anything lower.
- Stop-limit order: Stop-limit orders only execute at a predetermined price, facilitating full control in your automated exiting procedure. However, such orders carry the same non-fulfillment 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).
A Shot in the Dark That Could Pay Off
While stocks provide much intrigue, retail investors often find themselves locked out of early bird pricing opportunities. Better yet, in Waverley Capital’s case, it’s seeking a target in the media content space, an arena that will likely only expand in the years ahead.