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by plouffy 1976 days ago
Yes. SPACS are not stocks, not sure what the other replier is talking about (they're SPVs).

If a SPAC doesn't find a company to merge with you get your money back and some interest. If a SPAC finds a company, you have the choice to (1) stay invested in the SPAC and therefore the company or (2) refuse the merger and get your money back with interest.

Interestingly when you invest in a SPAC you actually get two things (1) the option to invest in the company they find, and (2) a warrant to buy even more stock. What's even more interesting is that you could actually sell this warrant while keeping the option to invest in the company the SPAC finds.
2 comments
wissam124 1976 days ago
One other point that I don't understand well with SPACs warrants. Once the merger has completed, it doesn't seem like the warrant price really tracks the underlying stock with weird situations where the warrant is priced below intrinsic value. Is there a straight arbitrage to make there or am I missing something?
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wissam124 1976 days ago
Not sure I understand what you mean at the end of your comment. If you sell the warrant, you no longer hold the option to buy the underlying stock, do you?
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