The post The practice and theory of DAT SPACs appeared on BitcoinEthereumNews.com.

This is a segment from The Breakdown newsletter. To read more editions, subscribe. “An economist says to a physicist: ‘Sure, this equation works in practice. But does it work in theory?’” — Overheard in the faculty lounge For those fortunate enough never to have learned the mechanics of special purpose acquisition vehicles, here’s all you really need to know: If you don’t like the company a SPAC finds to buy, you can get your money back.  There are lots of important details, of course — PIPEs, warrants, fees, the price you paid — but the differentiating factor is the redemption mechanism. SPACs raise capital by issuing shares at $10 and then looking for a company to buy. If you like the one they find, you stay invested. If not, they’ll give you your $10 back. In theory, this democratizes the IPO process. As a retail investor, you won’t be getting into the next Goldman IPO at the offer price — banks reserve IPO allocations for their top institutional customers. With SPACs, however, retail investors can typically buy in at or near the standard $10 offering price. You won’t know what company the SPAC will become, which isn’t ideal, but when you do find out, you’ll have the option to redeem at $10. In theory, that lets you participate in the IPO process at something close to the same terms of institutional investors. In practice, however, it rarely works out. Citing data from ListingTrack, the Financial Times reported that “the median return from [SPACs] that have completed mergers with target companies is minus 83% since 2020.” Minus 83%! Yikes. In hindsight, though, it’s not hard to see why. Here are some of the dubious businesses that were brought to the stock market in the last SPAC boom: electric-scooter sharing, hydroponic farms in…

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Filed under: News - @ July 29, 2025 10:33 pm