🕵️ Trump’s SPAC drama
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Hey Snackers,
Score 1 for Gen X, zero for Gen Z. “Face with tears of joy” has once again taken the top spot for most-used emoji of the year — closely followed by ROFL face and “loudly crying” face.
Stocks rose for the third day in a row today as investors reacted positively to news that Pfizer and BioNTech said their vaccine is effective against the Omicron variant.
Trump’s SPAC merger is being investigated, and scrutiny over IPO alternatives intensifies
SPAC at it again... with the federal inquiries. The SEC and FINRA are investigating a planned merger between former President Trump’s media company and Digital World Acquisition Corp. (DWAC), the special-purpose acquisition company that plans to take it public. Refresher: Trump wants to rival Big Tech and build a “non-cancellable global community” with Trump Media & Technology Group (TMTG). Trump’s still barred from Twitter, Facebook, and YouTube.
- On Monday, DWAC disclosed that in October regulators had requested info on trading and comms that happened before the TMTG deal was announced.
- Potential issue: Trump reportedly met with DWAC’s CEO before the SPAC had raised money. SPACs aren’t supposed to have a target identified when they initially fundraise, so the meeting could violate SEC rules if found to have represented substantive deal talks.
- DWAC said that regulators' requests indicated that there’s been no determination of wrongdoing.
What the DWAC... DWAC shares dipped 11% on the news, but rebounded 17% yesterday. When the merger was announced, DWAC shares quadrupled and it became the most traded stock on major exchanges that day. We still don’t know the identities of TMTG’s execs — besides GOP Rep. Devin Nunes, who’s set to become CEO — or the identities of investors who’ve committed $1B. What we do know:
- Social network + streamer (in theory): TMTG says it plans to launch "Truth Social" next year to compete with social giants, plus a “non-woke” Netflix rival.
- Big ambitions: TMTG forecasts $3.7B in revenue by 2026, though some of its growth projections seem contradictory.
SPAC scrutiny is rising… Companies that go public via SPAC sometimes face less oversight than those that IPO, but they’re still held to regulatory standards. SPACs have raised as much money as traditional IPOs this year. Now regulatory heat is growing to keep tabs. EV startup Lucid recently got an SEC subpoena about projections made as part of its mega-SPAC merger. And Nikola said it would pay $125M to settle an SEC probe related to statements made by its founder.
Utilities companies partner to electrify US highways, pushing a cure for range anxiety
Sparks are flying… There’s a new EV power player on the scene. Con Edison, Duke Energy, the Tennessee Valley Authority, and nearly 50 other US electric companies partnered to launch the National Electric Highway Coalition (NEHC) yesterday. Together, they plan to build a coast-to-coast network of fast-charging EV stations along major US highways by 2023.
- NEHC members have already pitched in $3B, but the group hasn’t set precise funding or station goals yet.
EV envy… Lately, carmakers have been the key drivers behind EV investments: VW, Daimler, Stellantis, Ford, and GM have committed $330B to developing EV tech in the next four years. But President Biden’s recent infrastructure bill (now a law) sets aside $7.5B for EV-charging stations, offering more types of companies an incentive to support EV infrastructure too. That’s:
- Good news for utilities companies, which could tap into Biden’s coffers, and good for EV-charging companies like ChargePoint and EVgo, which run their own networks and might access more $$.
- Bad news for Tesla, which has spent billions building 30K+ global charging stations and could lose the competitive moat of its own network. Also: Tesla isn’t eligible for some of the gov’t funds. Elon Musk told WSJ that the charging subsidies in Biden’s bill should be deleted.
- Just the beginning: Analysts say $7.5B is only 15% of the $50B necessary to hit Biden’s goal of building 500K EV chargers by 2030.
A cure for range anxiety could be near… About 60% of drivers say range anxiety is a barrier to EV-buying. Now there’s clear incentive not only to create more powerful batteries but to build more chargers — which could make EVs a lot more practical. As companies race to grow America’s charging network 10X to hit Biden’s 2030 goals, EV-charging investments could accelerate.
What else we’re Snackin’
- Cloudy: Amazon’s AWS, aka the world’s largest cloud service, suffered an hours-long outage that caused problems for services including Disney+, Netflix, and Amazon.
- IOU: Some Evergrande investors say they still haven’t received crucial bond payments after a grace period expired, which could bring the Chinese real-estate giant closer to default.
- Warned: Biden told Russian President Putin that the US would respond to an invasion of Ukraine with strong economic penalties.
- Bearish: Goldman Sachs CEO David Solomon said the stock market’s bull run could cool off in the next few years. The S&P 500 is on track to post its third straight year of double-digit gains.
- Unstitch: Stitch Fix shares dropped 5% after the online styling company lowered yearly sales forecast on supply-chain issues and slow adoption of its direct-buy option.
Wednesday
- Earnings expected from: Toll Brothers, UiPath, GameStop, Restoration Hardware, Campbell Soup Company, Udemy, The Lovesac Company, Rent the Runway, and The Duckhorn Portfolio
Authors of this Snacks own shares of: Twitter, Disney, Tesla, Google, Ford, Netflix, and GM
ID: 1950172