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ready? Let’s talk money, startups and spicy IPO rumours.
Happy Saturday everyone. Despite it being a short week, I feel very rushed by the news we have published in the last few days. So let’s pause, recap and talk about SPAC which is a good little treat.
No, we are not going through the SPAC investor presentation today. We’ll dig into Babylon Health SPAC on Monday though. Instead, we’re discussing Sophie and Barkbox blank-check deals.
The two began trading this week after announcing their public debuts sometime back. And did things go well? Here’s CNBC on SoFi’s first minutes as a public company:
SoFi, short for Social Finance, went public by merging with Social Capital Headosophia Corp V, a blank-check company run by venture capital investor Chamath Palihapitiya. The stock closed up more than 12% at $22.65.
It’s a win not only for Sophie, but also for the somewhat embroiled Chamath Palihapitiya, whose SPAC stakes have lost some luster in recent months; Of course all SPAC-led openings are speculative, but some retail traders index more on Palihapitiya’s reputation than fundamentals – what can you do!
Barkbox also made a complete recovery when it began trading after its own SPAC combination expired this week, as Barrons reported:
BARK stock (ticker: BARK) was trading at around $12 in the afternoon, jumping about 7.5% on Wednesday. This puts the company’s market value at around $2.4 billion.
Barkbox stock has since given up some of its gains, but managed to go public without falling below its initial SPAC value. This is a win, because of how the market situation has changed since it was initially announced.
Two wins in a week is good news for SPAC-land and the myriad players who are on the blank-check and startup sides of the market. Naturally the two solid results don’t make for a trend, but it seems clear that the SPAC-route for companies with physical revenues isn’t quite as pithy as we might have expected.
If you think SPACs are generally annoying, wait until we fuse the blank-check boom with crypto. As we’re going to do!
This week, Circle, a crypto-focused company with a special taste for stablecoins, raised $440 million. It was an ocean of capital for a company known for its USDC stablecoin; It is also reported to be considering a SPAC-led IPO.
What is a stablecoin? It is a cryptocurrency that is linked to fiat currency. In the case of USDC, as you guessed it, the coin is pegged to the US dollar. Stablecoins are useful fiat comps within the crypto world and have proven to be extremely popular.
Circle’s USDC has $22.8 billion worth of supply in circulation, it claims, and several billion in daily transactions, according to CoinMarketCap data. Not bad! But it’s not clear to your humble servant how the firm generates huge revenue at a super-attractive gross margin. That’s what we’d expect from a company that closed nearly half a billion dollars (or USDC, we assume) in private capital in one go.
So, for once, bring on SPAC. Because we want to see the numbers very quickly and quickly given our curiosity.
Wrapping up, Ron and I had to dig into the earnings reports of several public companies the other day, essentially finding that virtual digital transformation acceleration Actually seems to be true for some companies.
This week’s news continued the argument. For example, Zoom’s earnings supported our thesis. Its revenue was up 191% in Q1 F2022 compared to Q1 F2021. It’s just bonkers good.
On the other end of the spectrum are Dropbox and Box, which are under renewed pressure from outside investors this week. The former private-market duo has run into a development wall and is taking fire because of it. Grow or die is more than just startup advice. This is what software companies need to do if they want to remain in charge of their own destiny.