🗞️ 10 SPACs that actually worked

Happy Sunday!

This week we’ve got highlights from Apple’s developer conference, better than expected inflation numbers, and a look back at the fallout of the SPAC craze.

Let’s dig in.

News Roundup

• “Apple Intelligence”: On Monday, Apple held its 2024 Worldwide Developers Conference where it unveiled a number of the new features that will be included in the upcoming iOS 18. These features include:

  • Apple Intelligence: Apple’s own general-purpose AI that can be used on iPhones, iPads, and Macs.

  • iOS 18: New home screen customizations, a completely redesigned photos app, and new text effects for iMessage.

  • iPadOS 18: Includes a new calculator app that can solve written mathematical expressions in the user’s own handwriting.

  And much more changes including MacOS Sequoia, WatchOS 11, and VisionOS 2.

• Skydance + Paramount Debacle: After 6 months of negotiations and even tentatively agreeing to a buyout, Paramount Global’s largest shareholder Shari Redstone finally ended talks with Skydance Media on Tuesday. Paramount Global (the parent company behind iconic brands like CBS, MTV, Nickelodeon, and much more) has had a tough go of it over the last several years as the company’s costly streaming transition has weighed on profitability. Acquisition rumors have been swirling for several months now, and it was reported that Skydance Media was set to merge with Paramount in a complicated ~$8 billion transaction. Paramount Global’s stock has dropped 13% since the announcement.

• Inflation isn’t all that bad? The US Consumer Price Index (CPI) reported a 3.3% increase for the month of May relative to the same period a year ago. The CPI, which is often seen as a proxy for inflation, was flat versus the month of April and has continued to come down following the inflationary highs of 2022 and 2023. Analysts track the CPI closely as it’s typically seen as an indicator for how the federal reserve may adjust interest rates. This better than expected result helped push the major indices higher on Wednesday on the hope that corporate borrowing costs could fall.

Earnings:

• Adobe: Software giant Adobe saw its stock jump 15% on Friday following better than expected earnings. The digital media company behind hit products like Photoshop, Lightroom, Acrobat, and more delivered $5.2 billion in total revenue for the quarter, up 10% from a year ago. And operating profit margins improved from 34% last year to 37% in this most recent quarter. To top off the impressive results, Adobe repurchased $2.5 billion worth of its stock, which is the 2nd highest quarterly amount in the company’s history.

• Broadcom: Broadcom, a key provider of semiconductors and datacenters to the AI ecosystem, reported 1st quarter results on Wednesday that came in well above Wall Street’s estimates. The $680 billion semiconductor giant reported 34% revenue growth for the quarter and raised their full-year sales guidance to $51 billion, up from $50 billion a quarter ago. With Broadcom’s stock jumping 10% this week, shares have now roughly doubled over the last 12 months.

• Wise: UK-based cross-border payments provider Wise reported its 4th quarter results this week. Revenue and earnings came in above expectations, but the company’s guidance for 2025 underwhelmed investors. Wise, whose mission is to provide “money without borders” stated that it plans to invest heavily in its operations and payments infrastructure this year in order to help reduce cross-border prices. While Wise’s ambition of being the low-cost provider should help drive payment volume, it appears it may also impact profit margins in the short-run. Wise’s stock closed down 16% this week.

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10 SPACs with Positive Returns

Since the start of 2020, more than 400 companies have come public through a Special Purpose Acquisition Corp (SPAC).

Of those 400+ SPAC mergers, less than 10% have generated positive returns for investors.

And the average return of all SPAC mergers during that time period? -67% 🤯 

But with the many investors now avoiding SPACs all together, there may still be a few promising businesses being wrongly dismissed by investors.

Here are 10 SPACs that have actually generated positive returns for investors:

1.) Vertiv Holdings

Sells digital infrastructure technologies for data centers, communication networks, and commercial and industrial environments.

• Total Returns since merger: 611%

• Market Cap: $32.8 billion

• EV/EBIT: 36.5x

2.) DraftKings

One of America's leading sports betting companies.

• Total Returns since merger: 285%

• Market Cap: $17.9 billion

• EV/Gross Profit: 11.3x

3.) Symbotic

Provides robotics and technology to help retailers and wholesalers automate warehouses and improve efficiency.

• Total Returns since merger: 266%

• Market Cap: $3.8 billion

• EV/Gross Profit: 10.3x

4.) Hims & Hers Health

Platform that allows doctors to offer telehealth consultations, manage electronic records, make digital prescriptions, & perform pharmacy fulfillment.

• Total Returns since merger: 134%

• Market Cap: $4.7 billion

• EV/Gross Profit: 5.7x

5.) Blue Owl Capital

Provides direct lending products off of a permanent capital base to middle market companies, large alternative asset managers, and corporate real estate owners and tenants.

• Total Returns since merger: 85%

• Market Cap: $9.1 billion

• Price to Book Value: 5.3x

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