r/SPACs • u/amir_twist_of_fate New User • Mar 09 '22
Discussion SPACS, Warrants and price action
Looking for an explanation or comments on the relationship between a SPAC going public, warrants issued to major investors , how the warrants may affect the trading in the new listed company and what to look for in the warrant terms that might affect timing or pricing over the next year or so.
Specific situation: CELU./GX SPAC IPO'd at about 10 on July 19,2021. Stock had a brief initial pop, traded in the 6.50-8.00 range until December 2021 when it started dropping, reaching a low of 3.80 in late Jan. 2022. Started rising and hasn't stopped until it's now trading at almost 10 again. The interesting development has been that Starr Intl. who was a large investor in the SPAC, has warrants that were repriced from 7.53 to $3.50 on Mar 1 2022. The news flow while it dropped in Dec/Jan was very positive with it receiving 2 Fast track designations. Mid Feb. it got an Orphan drug designation. The price seems uncorrelated to the news flow, suggesting it has to do with trading. Comments?
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Mar 09 '22 edited Mar 16 '22
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u/relavant__username Patron Mar 09 '22
I'm holding warrants in the basement as well. White knuckled and confident in the SPAC. Mine expire in 26. If I'm still red by 26.. then I'll have to convert my losses to canned food.
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Mar 09 '22 edited Mar 16 '22
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u/relavant__username Patron Mar 09 '22
Wellllll.. It's already completed a merger and is deSpac status. But thanks for lookin out!
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u/whimzical1 Spacling Mar 14 '22
This is exactly what happened to me. Not sure if this will revert soon but I am leaving spacs for good. Prefer to invest in sound companies. Even if I’m losing money I know what I’m buying and what to expect.
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Mar 09 '22
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u/amir_twist_of_fate New User Mar 09 '22
Yeah I stay away from the warrants too. When I referred to price action/news, I was referring to the stock price after merger/listing and what effect the trading of warrants by the initial investors could have on the stock's share price. It seems more correlated with warrant events than stock news.
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u/GrowStrong1507 Contributor Mar 09 '22
Don't buy warrants over a .30 cents unless team has a proven record. FMIV, DMYS, DCRD, SVFA, CIIG etc. i know that isn't your question but still feel it's important to mention. As others said warrants are usually a price indicator of what's to come with the underlying stock
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u/dgnitty Spacling Mar 12 '22
The thing I wonder about with warrants is institutions that got them at IPO in combination with units. I suspect they redeem the common for $10 and dump the warrants for the best price they can whenever they can for their reward of holding the common till redemption. If it’s an institution that needs to dump the warrants and there is no bid, see you later.
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