More Than 25% of the Companies That Merged With SPACs During the Boom Are Penny Stocks Now

Buzzfeed isn't the only company that merged with a SPAC that's hurting. Of the 365 companies that listed publicly through a SPAC merger between 2020 and 2022, 100 -- or 27% -- were penny stocks trading below $1 as of Thursday's close, according to data firm SPAC Research. From a report: Among the companies now in the cents-per-share club: WeWork, scooter rental company Bird, and aspiring electric vehicle makers including Nikola, Lordstown Motors and Faraday Future. Two-thirds of companies -- 248 -- are under $5 a share, a steep drop from SPACs' standard $10 initial listing price. SPACs, or special purpose acquisition companies, are publicly-listed blank check companies that are intended to merge with private companies and bring them public. Normally a tiny sliver of the financial sector, SPACs exploded in popularity when the markets turned particularly frothy and investors rushed into fast-growing, money-losing young companies. Startups that were years away from producing revenue were able to woo public investors with ambitious goals and revenue projections. Those projections are now being missed en masse. Of those that completed SPAC mergers during the boom, just 28 -- or 8% -- are trading above their initial listing price, according to SPAC Research. Another 28 aren't listed anymore, generally because they were bought by another company or went out of business.

Read more of this story at Slashdot.