“When an investor buys shares in a SPAC before a merger and holds those shares through the time of the merger and thereafter, he is paying at least $10 per share, and these days much more, for something like $7 in cash per share to invest in a target company. Assuming the target knows what it is getting and negotiates with the SPAC accordingly, the SPAC shareholder will bear the cost of that shortfall.”

“Of course, the SPAC bubble may continue for a while, and the investor’s bet could work out well for that reason. And even before the bubble, some of these deals did work out well for SPAC shareholders. But, an investment in a SPAC merger is either a bet on the bubble, or a bet that the sponsor can create a lot of value for SPAC shareholders following the merger. Historically, such post-SPAC value creation has not been common.”