But earlier this year, Hippo’s rosy outlook started to fade, and its stock recently traded around $4.50, down more than 50% from its first day of trading as a public company. Due to several factors, including lucrative payouts for SPAC funders, hundreds of people with deep pockets suddenly wanted to launch SPACs. Before blank-check SPAC companies decide what company they’ll acquire, they typically go public at $10 a share. If a SPAC stock is trading for $9.95 shortly before a merger closes, a trader can buy it, then redeem the shares for $10, pocketing a risk-free 5 cents per share, says Julian Klymochko, CEO of Accelerate Financial Technologies.) Those investors are still holding the stock, Ellis says.

Source: Forbes September 30, 2021 14:48 UTC