I've written a few times how insane the current SPAC bubble is, but it shows no sign of slowing down. There have been 151 SPAC IPOs so far this year, and with the current SPAC pipeline we could easily be at 250 by the time the year is over.
That's a wild number: over the past 5 years, only ~150 companies/year go public (and I think that number includes SPACs, so the actual number of operating companies going public would be lower!).
Astute readers might note that the potential for 250 SPACs going public this year is just a little higher than the average of ~150 companies that go public every year. That's got grave implications for SPACs; either you believe that the borderline depression the economy is in will result in an extra ~100 public ready companies that can be SPAC'd, or you believe that in a few months a huge swath of SPACs will be coming up on their end date and be desperate for a suitable merger partner to get a deal done and preserve their founder's shares.
The obvious answer to this shortage of public ready companies is that every SPAC should merge with an electric vehicle maker. But, even with the admittedly low standards for SPAC / EV mergers (apparently, you only need to be able to roll a truck down a hill!), I'm not sure that the market could handle 100 EV SPAC mergers. So those desperate deal-less SPACs are going to need to get creative to find deals that the market will approve.
Fortunately for those SPACs, they've come to the right place. I spent exactly four hours last night getting creative and coming up with some can't miss SPAC mergers. I think I came up with 8 absolutely killer ideas that the stock market (and, more importantly, Robinhood day traders) are going to love. I'd call them billion dollar ideas, but honestly in the current SPAC market I think that's underselling their value. I've even gone to the effort of building out the pitches for these mergers, even though to be honest they should sell themselves. You're welcome, SPAC sponsors. All I ask is you toss a few founder's shares my way, though honestly with ideas this good I feel like I should be launching my own SPAC!
That said, here are my top 8 SPAC merger pitches:
- When I say, "give me the last name of the most successful entrepreneur of our generation," one name comes to mind.... Musk. But who's to say the first name that should come to mind is Elon? Kimbal's been involved with the majority of Elon's successes! Why not bet on Kimbal? We are! Join our SPAC in betting on the man who could be one of the most successful entrepreneurs of our generation if you only looked at the results and didn't consider any of the context of his success or listen to any of his interviews.
- Besides, worst case scenario, Kimbal's business goes bust and Tesla bails us out anyway. How's that for downside protection!?!?!
- The commercial office market is huge, and in the wake of Covid it's ripe for disruption. So we're partnering with a founder who's already disrupted the market once. We're excited to announce our SPAC's combination with Adam Neuman's newest venture, UsWork.
- Let's face it: 2020 has been crazy. There have been plenty of major trends and story lines, but one of the biggest has been the demand for broadband, and one of the wildest has been oil prices going negative. When you think of profiting off of the demand for broadband and volatility in energy prices, only one firm comes to mind. That's why we're excited to partner with Jeffrey Skilling and the Enron 2.0 team.
- Honestly, the Enron one was too good to be true. Enron showing analysts a "veritable sham" to convince them of EES's value is literally the story behind Nikola, Enron attacking a cabal of shorts is what Nikola did (Skilling also famously gave analysts "the finger").
- Ok last one on Enron- between the founder's shares and warrants at SPACs, you're telling me the Enron team wouldn't have had a field day with financial engineering and burying insider payments within the deal structure? Why hasn't this SPAC deal happened???
- Speaking of trends, you know what's been killing it in the stock market lately? Social networks. Snap, Twitter, Facebook; doesn't matter the company, every one of them has seen their usage fly off the charts as bored teenagers spend their time at home pretending to pay attention to zoom classes while actually swiping on their phones. And as usage has skyrocketed, their stock prices have followed! You're probably thinking "Tik-Tok isn't public; why don't we SPAC that?" But who wants to deal with the risk of politics or your app getting banned while you're in the middle of a merger? You know what social network won't get banned? You know what social network would never swing an election or become riddled with crazy conspiracy theories? Myspace! That's right, we're riding the social network trend and taking myspace public through our SPAC. SNAP sporting a $50B+ market cap while losing >$1B every year,. I can guarantee you the new myspace isn't going to lose $1B/year; isn't that good for a billion or three of value?
- You might read this story on the Trump administration trying to gift $20B in spectrum to Rivada because a bunch of Republicans are involved and think, "If Trump's going to gift Karl Rove $20B, imagine how much he'd give a family member," and be tempted to SPAC the Trump organization. Frankly, that lack of imagination is why you're reading this article while I'm getting paid the big bucks for dreaming up imaginary SPACs. Try these on for size:
- Idea #1- If the Trump admin is going to be handing out no bid awards to supporters, give every Trump family member you can find a key position in a SPAC and use the SPAC to bring back Trump Steaks. Combine the Trump family's track record of successful publicly traded companies with a no bid process that makes Trump Steaks the exclusive provider of meat to the U.S. army, and you've got yourself a winner!
- Idea #2- you know what's a hot market right now? Pizza delivery! Call me old fashioned, but I think the right to get a steaming pie covered in greasy meats delivered on game day should be constitutionally protected. But when you're ordering pizzas, don't you want your pie delivered by a company that shares your values? Well, if your values include heavy racism, a toxic workplace, and conspiracy theories that everyone is out to get you, do we have a pizza place for you! Papa John (yes, that Papa John) was ruthlessly fired for an innocent mistake (let he who has not used a racial slur on a company wide public relations training exercise cast the first stone, am I right?), and he's got huge issues with how current pizza chains are run. That's why we're partnering with the Papa on a SPAC that will trade on his pull in the administration to be the exclusive pizza provider to the U.S. government. Need a pie while you're standing back and standing by? Those other pizza chains might not want your money, but we do!
- Note that these ideas could be on a time crunch: you need to get them done before January in case Trump loses. But isn't rushing half baked companies to the market what SPACs are for?
- Honestly, the world is probably ending. And, with the world ending, why bother worrying about silly things like "your health" or "socially acceptable levels of sobriety"? Our SPAC is bringing back the original version of Four Loko with all of the banned substances. Our plan is to use the SPAC's cash to 1) pay off all the fines from the FDA we'll be incurring and 2) pack even more of the banned substances into our product to make you even more Loko. Remember, the more Loko consumers get, the more likely they are to buy our stock!
- Want to leave your house for any reason? Chances are you'll need to quarantine for fourteen days on the back end because every state in America is a hot zone. Maybe you'll chose to spend that quarantine time doing something labor intensive with almost no reward like baking bread (the trend that's somehow sweeping the nation), but why spend your time doing something medieval like bread baking when you could be a little more modern and do something positively 80s like putting together random electronics? That's why we're taking advantage of the two-decade high vacancies in mall space and bringing back RadioShack!
- Look, maybe you think this is a dumb idea and it'll inevitably end up in bankruptcy. To which I say: fantastic!!!! If Hertz can become America's favorite trading sardine after filing for bankruptcy, imagine how wild the Robinhood-ers are going to go when offered the opportunity to trade a company that has already gone bankrupt twice in RadioShack! Filing for bankruptcy twice is known as "chapter 22;" if our SPAC fails Radioshack will be filing for Chapter 33 and I'm pretty sure the only reason they'll be calling it that is because every member of our management team will be joining the three comma club as our stock skyrockets in a speculative frenzy.
Who do I make my rubber check out to?