(Bloomberg) — Going public through a blank-check company is a bet that seems to have paid off only for crypto companies so far this year.
Monex Group’s Coincheck Inc. was the latest to agree to a reverse-merger with a special purpose acquisition company, making it the 10th crypto firm to announce such a deal since last year. Others, including stablecoin operator Circle and mining companies BitFuFu and Bitdeer are still eyeing a U.S. listing this year.
“You often can’t evaluate the success of these deals until they close, because they’re going to trade at least near their cash-in-trust value ahead of the shareholder vote,” said Kristi Marvin, CEO of research firm SPACInsider. “The better way to evaluate their performance is post-closing of the transaction.”
The stock performance of companies that go public via SPACs have been abysmal. But three crypto firms that took this route have been bucking the trend. Core Scientific Inc., one of North America’s largest Bitcoin miners which premiered on Jan. 20, rose 1.5% through Wednesday as of 10:05 a.m. Bakkt Holdings Inc. and Cipher Mining Inc. rose 43% and 11%, respectively, over that period. Meanwhile, the De-SPAC Index — a group of 25 companies including SoFi Technologies Inc. and WeWork Inc. that debuted on exchanges after a blank-check deal — dropped 9%. Core Scientific, the only crypto firm in this index, has a 4.1% weighting.
Despite doing better than non-crypto companies that listed via SPACs, the stocks of these companies took a beating as Bitcoin prices careened. Cipher and Bakkt are trading below where they initially started when they first listed following their respective SPAC deal closures. The latter declined as investors questioned how long the marketplace operator would take to realize its potential.
It’s still unclear how the newest crypto SPAC deals are being received because of the deep gloom set in that corner of equity capital markets. Trading activity in the heyday of the SPAC used to spike sharply when a deal was announced — think Virgin Galactic Holdings Inc. when it listed in October 2019 and DraftKings Inc. when it debuted in April 2020.
But the party got too hot and blank-check firms started trading below their IPO prices as investors waited in the wings to make sure that SPACs were able to close deals. At least 10 SPACs taking crypto firms public are trading roughly in the same ballpark of $10. This is approximately what the blank-check companies used to trade at before a crypto deal was on the table.
There’s also the question of when these companies will list, given that a few companies’ deals are taking longer than initially expected to close amid heightened regulatory scrutiny. The SPAC taking mining operator Saitech Limited filed to extend its deadline this week.
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