Couldn't figure this out, but post merger, does the stock price pre-merger and number of shares transfer 1 to 1? If so, let's say a SPAC is at $1billion cap vs the actual valuation of the merging company of $10billion, are we only a portion share holder of the $1billion? Are the rest of the $9billion issued through warrants post-merge?
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Originally Posted by Razor Ramon HG
I would recommend playing merger like ERs. Really depends on your style.
1. Sell prior to merger
2. Self half and let the other half ride
3. Hold through the merger and hope it pops
Because I tend to buy in at a reasonable price point, I tend to hold through the merger.
If you get in close to NAV, most of them are usually around $20 by the time they merge or at least the ones I've been paying attention to. Depending on your entry point, it's some decent double digit gains even if you sell everything pre-merger.
The biggest thing with SPACs is the opportunity cost IMO. You could be waiting for months or years for an acquisition target, a merger vote, and the actual merger. A lot of things can happen in between these key dates. This is extremely true if you purchase a SPAC at near NAV prices like GHIV.
But yeah, everything is a gamble even SPACs, so don't make investment choices based on what I typed above because even I don't know what I'm doing half the time.
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