Social Capital Hedosophia Holdings VI (NYSE:IPOF) stock is in full focus following news that Bill Ackman’s Pershing Square Tontine Holdings (NYSE:PSTH) would wind down and return $4 billion to investors. Ackman attributed market volatility, the poor performance of completed special purpose acquisition companies (SPACs), and high redemption rates as reasons for the capital return.
Now, IPOF stock investors are growing increasingly nervous. The Chamath Palihapitiya SPAC now only has 93 days, or until October 14, to find a target acquisition. Bloomberg reports that the $1.15 billion investment vehicle declined to comment on the situation.
With no confirmed target company in sight, IPOF investors are constantly scanning Palihapitiya’s Twitter page for any potential updates. For example, the billionaire recently announced that he had sold his stake in the Golden State Warriors. As a result, there is speculation that he may use the proceeds to further deploy capital into IPOF’s private investment in public equity (PIPE).
IPOF Stock: October 14 Marks the Target Acquisition Deadline
Meanwhile, SPAC liquidations are picking up. Excluding PSTH, seven SPACs who launched in 2020 have entered into, or are planning to, liquidate their investments. This compares to three SPACs from 2017 and two SPACs each from 2018 and 2019. No SPACs launched in 2021 have plans to liquidate, yet.
Loeb & Loeb partner Mitchell Nussbaum has over two decades of SPAC advisory experience. He notes that 248 SPACs listed in 2020 and believes that more of these vehicles will liquidate their investments soon. Still, Nussbaum doesn’t expect more than 20% of SPACs to liquidate because they can extend their merger deadlines. According to data from SPAC Research, there are a total of around 600 SPACs with over $161.5 billion in investment money.
Even then, a liquidation isn’t the end of the world, as a majority of SPACs launched in 2020 are trading below their offer prices. In some cases, liquidations can even “provide a decent return.”
The clock is slowly ticking down for IPOF to find a target company. Meanwhile, rumors of a SpaceX or Starlink merger seem to be cooling off as investors await Palihapitiya’s word. At this point, some IPOF investors are speculating that Palihapitiya will choose to extend the merger deadline.
On the date of publication, Eddie Pan did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
