SPAC Comeback Criticism
About SPAC Comeback Criticism
After the SPAC boom of 2020 to 2021, studies showed that most SPAC mergers destroyed value for retail investors. A study by Klausner and Ohlrogge found that SPAC investors lost an average of 50.3 percent within a year of merger. Promoters earned outsized returns while public investors bore the risk. The SEC investigated and imposed stricter rules. Many SPAC sponsors faced lawsuits. High profile SPACs including Nikola, WeWork, and Clover Health collapsed. The SPAC bust demonstrated that Wall Street innovation often enriches insiders at the expense of retail investors. By 2023, the SPAC market was effectively dead, with few new launches.
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