Some HN poster made a good point about SPACs recently which is that the price discovery mechanism present in the IPO process turns out to be pretty important and it's likely one of the reasons so many SPACs immediately plummet in value when they get listed.
It's pump and dump with a fresh coat of paint. In 2005 I ran WorkZoo (a job search that competed with Indeed) and we were hot stuff just after Google's IPO. Vertical search was going to be the 'next big thing'. We had a group approach us wanting to reverse merger us onto the public markets clearly to pump the stock post the Google IPO hype. We told them what they could do with their idea. Honestly I'm far happier being able to look myself in the mirror and smile than having potentially profited from crap like that.
I don’t know if it was me, but I generally agree that SPACs seem like a bad idea for everyone except the person dumping the result on the public for quick cash.
The incentive structure with SPACs is so blatantly perverse, I'm shocked they became so prevalent. The sponsor makes a boatload of money for any deal, regardless of how terrible it is, and always loses money if they don't make a deal. Given that setup, it would be shocking if there weren't a lot of bad deals.
The popularity of these vehicles honestly makes me question the competence of many supposedly sophisticated investors and executives. I get that a lot of this was targetted at taking advantage of low information investors, but many professional investors dumped money into these things as well.
