It’s a lot of money riding on a barely formed business. In general, investors have a tendency to overvalue SPACs, which are structured in a way that dilutes everyday stock pickers. In an April paper, researchers at Stanford and New York University looked at 16 SPACs that merged in 2019 and 2020, then traded for at least 12 months after their mergers. On average, they lost 35% of their value during that time, even as the overall market grew. “This is just a SPAC on steroids,” says Michael Klausner, a coauthor of the study who serves as a business and law professor at Stanford. “You combine hype with hype, and you get hype squared.”