Premarket stocks: market mania has fueled a SPAC boom. Here is who is in danger

The sign of the times: Among the most notable indicators of market rage was the explosion of special purpose procurement companies or SPACs. The so-called “empty check” companies, which allow investors to support sponsors seeking a private entity to be public, have raised tens of billions of dollars in 2021, an increase of over 2,000% compared to 2020.

More and more people are sounding the alarm. US regulators have warned that investors should not support SPACs just because stars are attached. Meanwhile, short sellers’ interest in SPACs has increased, according to data from S3 Partners, indicating that a growing number of traders believe that enthusiasm is overburdened and that stock prices are destined to fall.

Step back: If the SPAC frenzy got out of hand, who pays the price? Experts warn that not everyone will win a winner – and some madly proud retail investors could be hurt.

“Time for quick money feels like it’s now behind us,” Atwater said.

One concern is that there is simply too much SPAC money pursuing a limited number of solid takeover targets. This could force homeowners to consider purchasing less mature companies that may not meet high growth expectations or enter into less profitable deals.

“There are a huge number of SPACs that are created every day,” Will Braeutigam, SPAC partner and leader at Deloitte, told me. “With so many SPAC sponsors bidding for the same companies, the growth value you think might be there may not exist.”

Guillermo Baygual, co-head of mergers and acquisitions for Europe, the Middle East and Africa at JPMorgan Chase, notes that not all SPACs are created equal. He believes that this corner of the market will “become a more professional asset class over time”, as investors distinguish between companies with proven experience and those created just to take advantage of the moment.

Meanwhile, everyday investors who have not discerned could be allowed to hold the bag, according to Atwater. He showed a rush to buy shares of SPACs before even announcing the takeover targets.

“You would think that investors would wait to see what [they] buy, “Atwater said.

If a target is not identified, the initial investors will receive back the $ 10 per share standard, Atwater explained. But investors who want to get there before a transaction and pay 20, 30 or 40 USD per share on the open market make purely speculative bets.

Some SPACs will end up as success stories. But Baygual has warned that not everyone is a safe bet. “Investors should make investment decisions based on fundamentals,” he said.

Investors rejoice when Intel unveils the change plan

Most recently: Intel unveiled several major initiatives, including a $ 20 billion investment in two new chip manufacturing facilities in the United States.

The moves mark the company’s attempt to reaffirm its position as the undisputed leader in the semiconductor industry after several difficult years, reports my CNN Business colleague Clare Duffy.

“We are setting a course for a new era of innovation and product leadership at Intel,” Gelsinger said in a statement.

Remember: Gelsinger has taken over a company facing a number of challenges, including unprecedented competition from Apple and an activist shareholder calling for change. Intel has also experienced major delays in producing next-generation chips, allowing TSMC and Samsung to move forward.

In the last two years, Intel’s shares have risen just over 19%, compared to the nearly 114% increase in the PHLX Semiconductor index that targets the broader sector.

Looking ahead: the new strategy could help solve many of these problems. Intel, which is working to refine its next-generation 7-nanometer chip, plans to review its manufacturing process and rely more on outsourcing. At the same time, it will put more money behind its Arizona campus, creating thousands of jobs.

Investor presentation: Intel shares rose nearly 4% in premarket trading, while shares of competitor AMD are smaller. Shares of TSMC, the world’s largest chip maker, fell 3% in Taipei on Wednesday.

GameStop shares are crashing after disappointing results

GameStop shares have risen this year due to growing enthusiasm on social media, as novice retailers have bet that the video game retailer could lead to a profitable switch to digital that would boost sales.

Signs of change: global e-commerce sales increased by 175%, representing 34% of the company’s total net revenue during the quarter. In the same period last year, e-commerce accounted for only 12% of total sales.

“Our focus in 2021 will be to improve e-commerce and the customer experience, increase delivery speed, provide superior customer service and expand our catalog,” CEO George Sherman said in a statement.

But will it be enough to keep investors interested? The company’s shares initially increased by more than 5% in trading after the program, but decreased by 14%. It closed at $ 181.75 on Tuesday – down 9% from the beginning of the week, but still up nearly 865% a year.

It follows

General Mills reports the results before the US markets open.

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