Many people are looking for high-quality and low-risk investments. Some of these people go for real estate and bonds, but others choose to invest in stocks. Exchange-traded funds (ETFs), Mutual Funds, and general stocks could be good options. Some of the great stocks to invest in are SPAC stocks. SPAC stocks are getting popular every day due to the versatility and security they provide. In this article, we will walk you through what SPAC stocks are and what are the best SPAC stocks to invest in 2022.
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What is SPAC?
A SPAC (Special Purpose Acquisition Company) is a company that acquires a private company. These SPACs are founded by big business tycoons who have years of experience in brand making. As they do not have any products or services that they offer to the public, they are also called shell companies. Basically, what these companies do is open an initial public offering (IPO) to collect capital from the public. They will store this money in the trust account. They will have a specified period of time (generally 2 years) to find and acquire a private company. They will use some money from the trust account to manage the SPAC company.
Why are SPACs so Popular?
SPACs are becoming so popular these days because of their advantages over the traditional IPO pedagogy. Private companies that are seeking to go public have to file for IPO to SEC and the process is very lengthy and expensive. SPACs already have done the process faster as they already have collected capital from SPAC IPO. It will be faster for a private company to undergo a merger with an SPAC company than to file an IPO. As a result, many private companies are attracted to the SPAC. Also, SPACs are less risky for the public to invest in. They can trade their stocks or redeem their shares if they think the merger is not satisfactory.
With the involvement of the SPAC warrant, investors will have more coverage over the SPAC stocks with little investment. Even if the SPAC company was not able to acquire a private company within the time period, the SPAC company will return the investments back to the investors. This gives an extra layer of security for your investment.
Best SPACs to invest in 2022
As we already know what advantages SPACs provide to investors and as well as private companies, let’s now see what are the best SPAC stocks to invest in 2022.
Before going through the list, here are some of the honorable mentions that have already started their business combination. DWAC (Digital World Acquisition Corp.) has already announced its merger with Trump Media and Technology and is expected to close the transaction in the second half of 2022. GGPI (Gores Guggenheim Inc.) is also set to complete its business combination with EV-making company Polestar. If you are fast enough, you can still purchase these stocks before the completion of the transaction.
Now let’s go through some trending SPACs that you can purchase in 2022.
CF Acquisition Corp. VI
CF Acquisition Corp. VI (Nasdaq: CFVI) is a New York, NY-based SPAC company incorporated in 2020. The aim was to get a merger with a private company that provides financial services, real estate services, healthcare, technology, and software industries. CFVI has already announced its merger with the video-sharing platform, Rumble on Dec 1, 2021, at a $400 Million valuation. The Combined company’s new strategy would be to grow the user engagement with it and to restore the internet by making it free and open again.
DPCM Capital, Inc.
DPCM Capital, Inc. (NYSE: XPOA) is a Miami, Florida-based SPAC company incorporated in 2020. The aim was to target a company from sectors like capital stock exchange, stock purchase, asset acquisition, and technology. XPOA announced its definitive combination agreement with quantum computing firm D-Wave. The merged company will be valuated at $1.35 billion after the transaction is completed. D-Wave is a leading company that provides quantum computing systems, software, and services.
COVA Acquisition Corp.
COVA Acquisition Corp. (Nasdaq: COVA) is a San Francisco, California-based SPAC company incorporated in 2020. COVA has announced its business combination with mobility tech company ECAX Holdings at a valuation of approximately $3.82 billion. The future goal of the combined company is to take strategic and investment decisions for the worldwide growth of the company.
PropTech Investment Corporation II
PropTech Investment Corporation II (Nasdaq: PTIC) is Wilson, Wyoming-based SPAC company founded in 2020. The SPAC company has announced its business combination with Rental Marketplace Appreciate at a combined value of $416.1 million. The future plan of the combined company is to make the end-to-end process of buying and owning a rental property easier and seamless.
Kludeln I Acquisition Corp.
Kludeln I Acquisition Corp. (Nasdaq: INKA) is a Berkeley, California-based blank check company incorporated in 2020. INKA announced has announced its business combination with a data intelligence company “Near”, at a valuation of $1 Billion. Near already has 1.6 billion user profiles worldwide and the combined company is aiming to grow its clients and increase its annual revenue by $91 million in 2023.
SPACs are versatile options to diversify your investment portfolio. They are less risky and provide a greater advantage if you do strategic investments. They provide greater market coverage with SPAC warrants and provide users the ability to redeem their shares during the De-SPAC transaction.
The above list is based on the recent news from the SPAC world and might change in long run. We advise you to do proper research before investing in any SPAC stocks.