How I Analyze SPAC Stocks

SPACs (Special Purpose Acquisition Corps) are all the rage now. I write a lot of articles online about these blank check vehicles. This article will pass on some of the techniques I use to analyze these stocks. It will show three easy ways to value the SPAC stock and help you pick the right one. At the end of the article, there are 5 examples of recent SPAC stock deals I have analyzed and written about using these methods.This is the cardinal rule in blank check investing. There are a ton of SPAC stocks out there right now. Spacinsider.com reports that there are now 546 blank check stocks out there. How in the world are you going to pick the right one, if at all? The answer is to only buy those that have announced a clear merger target.The reason for this is clear. Only a little over half of the SPACs out there will end up picking a target private company with which they will merge. The way this works is that the SPAC usually has 24 months from the date of their IPO to actually close a deal. Sometimes there are extensions. If they can’t find a willing target the SPAC is liquidated and the money returned to investors, with interest. There are three reasons why announced merger deals are likely to close.First, private companies are keen to do the deal. Keep in mind that the competition for private companies that are large enough and ready to be public is limited. There are now many more SPACs willing to interest them. One advantage to private companies in doing a SPAC deal is that they can get paid cash for some of their existing shares. In addition, their company and board will usually end up in control of the…