Company / Analytics

Analytics, 17 February 2021

Best SPAC stocks in the stock market today

What is A SPAC stock?

A special purpose acquisition company (SPAC) is a company with no commercial operations. A SPAC is structured strictly to raise funds through an initial public offering (IPO). Some people refer to them as blank check companies. Once a SPAC has raised capital, it then identifies a private company to merge with. This essentially provides a faster way for a private company to go public, without the traditional, more lengthy IPO process. While SPACs have been around for a few decades, their recent popularity has something to do with the electric vehicle (EV) revolution we are experiencing in the stock market today. Indeed, many investors are only familiar with SPACs linked to an EV-related business. For example, Li-Cycle Corp, a recycler of lithium-ion batteries, is nearing a deal to go public through a merger with Peridot Acquisition Corp. But as SPAC goes mainstream, it has generated interest from companies in other sectors. Reports indicate that companies such as chemical-technology-maker Origin Materials is in talks to go public via Artius Acquisition Inc.

Should you consider SPAC stocks?

The popularity of SPACs has generated attraction among investors who are interested in diversifying their portfolio or having a share of the new pie in town. Not all SPACs are created equal, and as with all investments, there is a chance you could burn your investment because they often come with more uncertainty and risk. However, there are still companies that could bring once-in-a-lifetime opportunities.

SPAC stocks to buy

And we wanted to highlight some of the SPACs making waves and that could be worth considering, including Tortoise Acquisition II Corp; Foley Trasimene Acquisition II Corp.; and Churchill Capital Corp IV.

Tortoise Acquisition II Corp.

Tortoise Acquisition II Corp. saw its stock price soar nearly as much as 47% on news that it will merge with Volta Industries. Volta is a huge player in the electric vehicle charging space. That makes this deal very interesting. Volta Industries develops, manufactures, and installs a network of EV charging stations. From the deal, Volta will receive $600 million. The amount includes a $300 million investment from BlackRock, Fidelity Management & Research, and Neuberger Berman Funds. The company will utilize its proceeds to accelerate the buildout of the company’s charging network.

But since the merger announcement, Tortoise Acquisition II Corp stock has seen a downward trend. If you are a potential investor, would buying at dips be an attractive option to you?

While these stocks remain interesting, as an investor, you should do your research. With several other charging companies on the market or about to come public, Volta will certainly face competition. However, with its existing footprint and retail strategy, this deal is certainly worth keeping on your radar.

Foley Trasimene Acquisition II Corp

Foley Trasimene Acquisition II is another trending SPAC stock in the market, though it’s not like other SPACs in the market. Foley’s target Paysafe is an extremely attractive acquisition target. The most intriguing aspect of the business is its involvement in the U.S. gaming market with payment solutions Skrill and Neteller (formerly known as Moneybookers) through the acquisition of Paysafe Group. Paysafe is the exclusive debit and credit card processor for DraftKings Inc.’s UK business.

Paysafe operates across several geographies, offering both digital wallets and prepaid payment methods. Paysafe also offers e-commerce solutions to merchants, simplifying the recording of online and offline payments. With the company’s broad moat in the cashless payment and online gambling segments, it makes Foley Trasimene Acquisition II among the best SPAC stocks to buy, especially if the deal goes through.

Churchill Capital Corp IV

Churchill Capital Corp IV (CCIV) SPAC stock has also surged in popularity among retail investors., due to a possible merger with Lucid Motors. Lucid Motors is an EV company with a premium focus. A deal with Churchill Capital could give a valuation of $15 billion for the EV maker. Lucid also happens to have strong backing from the Saudi Arabian sovereign wealth fund, which is interesting since it’s not always common for EV start-ups to be funded by deep-pocketed sovereign funds.

Given the rumors about Lucid merging with CCIV stock, investors may be wise to keep Churchill Capital SPAC stock on their radar. They should also be aware of the risks of buying any stocks on rumors. But if the rumors turn to be true, the risk-takers will be getting a payday.

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