The SPACS option for investors should be considered a trendy and ultimately risky investment vehicle, writes Adam Lachinsky, a contributing columnist for the Washington Post.
SPACs have been around for decades. However, Lachinsky writes, “Think of the SPAC debacle as the last gasp of the low-interest-rate era. When money was nearly free, Wall Streeters could compete with each other to conjure novel ways to raise and deploy capital. As rates rose, it became harder for cheap money to chase bad ideas, forcing companies to actually have profitable business models to attract financing. Last year, there were just 98 SPAC deals on Wall Street, about half the level in 2021.”
The SEC recently released new rules tightening listing requirements for SPACs.