Shares of Bridgetown Holdings (NASDAQ:BTWN) stock rocketed as much as 25% higher Tuesday morning after reports broke that the special purpose acquisition company (SPAC) is considering a merger with Indonesia’s e-commerce giant PT Tokopedia. So what do you need to know? And why are investors bidding up BTWN stock?
Well to start, what exactly is happening? Bloomberg reported that the blank-check company is considering taking Tokopedia public. Just like that, investors have been chasing up BTWN stock on Tokopedia SPAC merger hopes. But why?
Tokopedia is the second most-valuable startup in Indonesia, following just behind a popular ride-hailing startup. This is largely thanks to the backing of SoftBank (OTCMKTS:SFTBY) and Alibaba (NYSE:BABA). As with other SPAC merger news, investors always appreciate that the potential merger target has institutional backing.
And perhaps more importantly, Tokopedia has been and should continue to benefit from its business model. As an e-commerce platform, the same Covid-19 trends that have lifted Amazon (NASDAQ:AMZN) have lifted Tokopedia. This comes as more and more consumers rely on online shopping, and as more consumers gradually adopt the e-commerce model. Investors in BTWN stock may see a Tokopedia SPAC merger as an opportunity to get in on the ground floor of this e-commerce company.
BTWN Stock and the Tokopedia SPAC Merger
Lastly, even without any confirmation of the Tokopedia SPAC merger, there is still a reason to weigh BTWN stock here. What is that? Well, Bridgetown Holdings has the backing of billionaires Richard Li and Peter Thiel, and could have a value as high as $10 billion in a SPAC transaction. Right off the bat, this makes this SPAC merger news worth putting on your radar, considering that it is one of the larger deals in the making.
Investors may be drawn by billionaire Thiel’s track record. He was a co-founder of PayPal (NASDAQ:PYPL) and an early investor in Facebook (NASDAQ:FB). More recently, he co-founded the now-hot big data startup Palantir Technologies (NYSE:PLTR).
Bridgetown raised $550 million in an initial public offering in October as SPAC fever gripped Wall Street. In its post-IPO trading, the shares reached as high as $25.84 a piece. Bloomberg noted earlier that blank-check companies have raised more than $29 billion since July 1. About 40% of 2020’s initial public offering volume has been in the form of SPACs.
On the date of publication, Robert Lakin did not have (either directly or indirectly) any positions in the securities mentioned in this article.
InvestorPlace contributor Robert Lakin is a veteran financial writer and editor, following fintech, agtech and property tech startups.