It’s been a while since Chamath Palihapitiya’s special purpose acquisition company (SPAC), Social Capital Hedosophia Holdings V (NYSE:IPOE), announced its intention to merge with financial services platform SoFi. That news was released on Jan. 7 of this year, and IPOE stock made a big move to the upside at that time.
Palihapitiya has been called the “SPAC king” as he’s been the sponsor of numerous SPAC’s. In fact, the Social Capital Hedosophia Holdings landing page shows six of them, all starting with the letters “IPO.”
The period of time between the acquisition target identification announcement and the finalization of the merger isn’t supposed to be too long. Yet, the merger hasn’t closed yet and IPOE stockholders are getting weary.
Perhaps the shareholders just need a boost of motivation. Let’s see if we can rally the troops today, and even bring some skeptics over into the bull camp.
A Closer Look at IPOE Stock
It was in October of 2020 that Social Capital Hedosophia Holdings V went public through an initial public offering (IPO). 70 million units were offered at $10 apiece at that time, and so $700 million was raised for the company.
Between the IPO date and the announcement that Social Capital Hedosophia Holdings V would reverse-merge with SoFi, the share price drifted up from $10 to $12.
Upon that announcement, however, IPOE stock quickly rocketed up to $19. By Feb. 1, 2021, the stock had reached a 52-week high of $28.26.
It’s easy to see why the investors were so excited, and why the share price rose sharply. Palihapitiya has a reputation for success in the SPAC sphere.
It should be noted that on Jan. 7, the date was set to close the merger deal by the end of the first quarter.
It’s also been reported that the merger date was supposed to be April 9.
Yet, at the end of April, investors were still waiting for the deal to close. And by that time, IPOE stock had declined to exactly $17.
Back on Track
I don’t believe the stock-price decline is a reason to dump shares. Patient investors should be rewarded in the long run.
Meanwhile, contrarians can take advantage of this situation as the shares are now trading at a bargain price.
Besides, it’s not as if the merger will be delayed forever. Regarding that, SoFi’s investor relations team recently posted a pair of tweets that ought to provide some comfort.
The first tweet said, “We just refiled an amended S-4 with the SEC to reflect the new accounting guidance on SPAC warrants and we look forward to hearing back from the SEC.”
Then, the follow-up tweet reported, “Once we clear any comments on the filing from the SEC, the next step would be to request effectiveness, followed by a mailing of the proxy and a duration of three weeks for shareholders to vote.”
Patience Is the Key
So it appears that the merger’s closing is back on track. Or more accurately, it never really went off the track in the first place.
I suspect that the IPOE stock price declined from its peak because traders want quick gains.
Going forward, the investors should just be patient and understand that the mergers can be complicated. These things take time.
SoFi’s value proposition as a financial technology one-stop shop hasn’t changed. Impressively, SoFi “has allowed more than 1.8 million members to borrow, save, spend, invest and protect their money since its inception.”
And if the SPAC hype has faded, that’s not SoFi’s fault. If anything, this is all just an opportunity to accumulate more shares of your favorite SPAC stocks, including IPOE.
The Bottom Line
The market really needs to purge itself of the get-rich-quick mentality. Complex merger operations don’t happen overnight.
Moreover, SoFi is still a transformative force in fintech. Therefore, IPOE stockholders should just relax and hold their shares.
On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article.
David Moadel has provided compelling content — and crossed the occasional line — on behalf of Crush the Street, Market Realist, TalkMarkets, Finom Group, Benzinga, and (of course) InvestorPlace.com. He also serves as the chief analyst and market researcher for Portfolio Wealth Global and hosts the popular financial YouTube channel Looking at the Markets.