Venture capitalist Chamath Palihapitiya, once dubbed the “SPAC king” for his role in popularizing blank-check companies, is making a return to the public markets. His new special purpose acquisition company (SPAC), named American Exceptionalism Acquisition Corp, is preparing to list on the New York Stock Exchange under the ticker symbol AEXA. According to a recent filing, the SPAC aims to raise $250 million and plans to focus on industries such as artificial intelligence, energy, decentralized finance, and defense.
Elevate Your Investing Strategy:
- Take advantage of TipRanks Premium at 50% off! Unlock powerful investing tools, advanced data, and expert analyst insights to help you invest with confidence.
For context, SPACs are shell companies that raise capital through an initial public offering (IPO) with the intent to merge with a private business, effectively taking that company public without going through the traditional IPO process. These deals surged in popularity during 2020 and 2021 after attracting big names like Bill Ackman and Palihapitiya. However, investor enthusiasm faded in the years that followed due to increased regulatory scrutiny and a wave of underwhelming or failed mergers. In fact, many SPACs either couldn’t find merger targets or saw their stock values drop after going public.
Despite this cooling-off period, Palihapitiya remains confident in the SPAC model. Indeed, in a letter to investors, he explained that his original intent back in 2017 was to help rebalance the dynamics between public and private markets. While he admits that SPACs aren’t a cure-all for the flaws in the IPO system, he believes that they still serve a vital role in funding innovation. Interestingly, one of his biggest success stories is SoFi Technologies (SOFI), which went public via a SPAC deal in early 2021 and has since grown into a company worth nearly $29 billion.
Is SOFI Stock a Good Buy?
Turning to Wall Street, analysts have a Hold consensus rating on SOFI stock based on five Buys, 11 Holds, and four Sells assigned in the past three months, as indicated by the graphic below. Furthermore, the average SOFI price target of $20.06 per share implies 14.1% downside risk.
