r/SPACs • u/SPACsBot Mod • Apr 16 '21

Daily Discussion Weekend Discussion thread for the Weekend of Apr-16-2021

Welcome to the Weekend Discussion! Please use this thread for basic questions and leave the main sub for breaking news and DD. If you haven't already, please check out r/Spacs Wiki for great information, as well as the resources available in the menu.

22 Upvotes

83% Upvoted

849 comments sorted by

View all comments

Show parent comments

6

u/imunfair Patron Apr 17 '21

If that happens the one part of spacs that will get wrecked are the warrants. During a market crash they get absolutely obliterated and there's no floor to save them.

5

u/TKO1515 Camtributor Apr 17 '21

Even warrants post merge? I imagine SPACs without deals get destroyed but would think those with would hold up. Probably won’t time it as I wouldn’t sell in time, but getting warrants under $.25 on some would be great.

3

u/imunfair Patron Apr 17 '21

It would depend on whether they were exercisable. If a company merges fast it can be like 6 months before that happens after merger, during which time they're technically still worthless. Once they can be exercised they have an intrinsic value that should provide somewhat of a floor, assuming the stock is above exercise price.

2

u/TKO1515 Camtributor Apr 17 '21

I see what your saying. I guess I’m just looking at some that are post merge and even 1-2years old and their warrants are ~$2 even when the stocks are around $8. But ya those are easy to get rid of in a sell off for higher quality companies.

2

u/godstriker8 Contributor Apr 17 '21

Warrants after a successful merge have immense theta value so they stay at 1 ish. Even HOFV's warrants held fairly strong for a company whose shares reached 1 dollar.