The blank cheque boom: Why the market for SPACs is exploding

3/25/21 8:00PM

The SPAC attack

‍The number of companies going public on the US stock market via a special purpose acquisition company (SPAC) has hit almost 300 this year - and it's only the end of March. According to data from SPAC Analytics, there have been 296 companies go public via a SPAC in the US, which greatly outstrips the 56 traditional IPOs.

What exactly is a SPAC? Good explainer here, but if you're short on time it's basically a public shell company with a big blank cheque that buys private companies.

‍FOMO

‍The SPAC boom reflects the state of private markets as much as public, and conditions couldn't be more perfect in both. Startup valuations are near all-time highs and stocks have gained 70% in a year. It's no surprise then that owners want to cash in their shares and investors don't want to get left on the sidelines. With less due diligence, and fewer parties to deal with, SPACs offer a quick solution for everyone.

One particular company, that was unceremoniously rejected by the traditional IPO process back in 2019, has finally got its deal...

‍WeWork is back

‍‍WeWork, a provider of co-working office space, announced this morning that it plans to go public via a merger with Bow Capital in a deal that would value the company at around $9bn. That's a decent outcome for WeWork owners relative to this time last year, but it is still way down on some of the $90-100bn valuation estimates placed on WeWork by the world's largest investment banks when they were trying to court the company 2 years ago.

Max Knoblauch5h

American Airlines joins the flock, hiking bag fees amid higher jet fuel prices

American Airlines on Thursday announced that it, too, will be hiking the fees it charges customers to check luggage.

With the move, all four of the major US airlines, which together control about 80% of the US market, have now hiked their baggage fees in recent days amid surging jet fuel prices.

The change will go into effect on tickets bought on or after Thursday, the same day Southwest’s hike begins.

Since late March, JetBlue, Delta Air Lines, United Airlines, Canada’s WestJet, and Southwest have hiked their fees. Experts expect more major carriers to follow, and to potentially tweak the pricing of other ancillary revenue sources like seat assignments and carry-on luggage.

American Airlines updates bag fees and Basic Economy fares

The change will go into effect on tickets bought on or after Thursday, the same day Southwest’s hike begins.

Max Knoblauch7h

Less than a year after implementing them, Southwest is also hiking its bag fees

Southwest Airlines has joined the growing list of airlines opting to hike their bag fees amid sustained higher jet fuel costs.

Starting today, the first checked bag at the carrier — which implemented bag fees less than a year ago — will jump from $35 to $45, and the second from $45 to $55. Southwest quietly disclosed the change Tuesday.

Southwest assigned the decision to “part of an ongoing analysis of the business and against the evolving global backdrop.”

As of Wednesday, jet fuel prices dropped to $4.16 a gallon, per the Argus US Jet Fuel Index, down from $4.81 on Tuesday following President Trump’s ceasefire announcement, which sent travel stocks soaring. Major airlines have shed some of those gains in premarket trading Thursday.

With the move to hike bag fees, Southwest joins JetBlue, United Airlines, Delta Air Lines, and Canada’s WestJet, all of which also boosted fees this month. Experts expect more major carriers to follow, and to potentially tweak the pricing of other ancillary revenue sources like seat assignments and carry-on luggage.