The SPAC bubble is going to pop — and it's going to be embarrassing

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Opinion | What happens when the SPAC bubble pops? Insider columnists jbarro and lopezlinette discuss the sudden SPAC surge, how it ends, and how it relates to other manias like crypto.

My sense is they are closely related and that's a factor behind the SPAC boom. The froth in the market and enthusiasm for new, more growth-oriented asset types has created an environment where it's easier for SPACs to trade above their offering price which in turn makes it more attractive to launch a SPAC. In the long run, that won't be sustainable.

Wall Street can make money on the way up and down. It can make money selling your shares, marketing, and then it can turn around and short you. So when the wind changes, Silicon Valleys thinks"hey, these guys are screwing us!" But actually, a lot of Wall Street smiles along, taking fees and waiting to turn around and take the other side of the bet the whole time.

In every bubble, even when they go bust, someone comes out a winner. Who ends up"winning" the SPAC bubble?The people who collect the fees on the SPACs. I mean and of course there will be other winners and losers — some companies that get taken public by SPAC will outperform expectations and investors in them will make money.

 

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