My diagnosis of fiduciary malpractice is borne out by the fact that many SPACs trade on various exchanges (usually the Nasdaq stock exchange), significantly below the value of the original money invested in the venture. Clearly, investors are getting nervous about the potential for sub-optimal deals taking place.
SPAC boosters claim that their investment vehicle is advantageous because of the speed with which it can make a major acquisition, and that companies want to attract SPAC attention over traditional IPO financing because of a lower regulatory hurdle to overcome. AKA: “It’s less expensive and a lot less paperwork to be bought by a SPAC than it is to go public.”
With dealmakers pulling out of 44 scheduled SPAC listings in the past three months, it seems that blank check companies aren’t quite so roomy after all.
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If anyone fondly remembers the dark days of pandemic lockdown, it should be Netflix investors.
Those lofty heights are in stark contrast, as these days “Netflix and chill” is an apt description of the stock’s temperature. Netflix trades under the ticker symbol NFLX on the Nasdaq exchange.
The streaming juggernaut once saw such high-flying growth, it was commonly referred to as a FAANG stock (Facebook, Apple, Amazon, Netflix, Google). And there seemed to be no end to new subscribers.
Well, their recent earnings report showed that Netflix is indeed starting to reach saturation point. And while that may not mean the company is in conventional trouble, it has prompted investors to reconsider what a proper valuation of the company should look like, as its price-to-earnings (P/E) ratio is now around 20, after the beginning of the year at over 50.
After announcing that its total subscriber count fell for the first time in 10 years, with losses of 200,000 subscribers for the quarter, Netflix promptly saw its stock price plummet off a cliff. It plunged 35% in a single day – April 20.
This post Understanding the markets this week: April 24
was original published at “https://www.moneysense.ca/save/investing/making-sense-of-the-markets-this-week-april-24/”
