A SPAC is a Special Purpose Acquisition Company. Until the loophole was recently closed (or at least narrowed), it was a way to speedrun becoming a publicly traded company, whether that’s a sensible move or not.
Basically, a venture capital outfit uses its millions and own positive balance sheet to get pre-approved to offer an IPO, then merges with another company that was the one they really wanted to have the IPO for in the first place, but doesn’t have the P/L to pass the consideration process.
A great example of how the SPAC system was horrendously exploited to the benefit of Wall Street and the detriment of retail investors Is Chamath Palihapitiya’s fleecing of his Twitter followers. youtube.com/shorts/qccmT...
In my past job I reported on these a bit. It really was a land rush in how the industry was trying to tap in. Didn't know they had one for this, though! 😂
