The market has led us on a wild ride this year. It dropped over 35% in February and March, and in only a matter of months, some indices were already hitting all-time highs again. Just look at the Nasdaq Composite, which is up 40% this year, even with the drop.
But the most interesting moves in the market this year have been from private companies entering the public markets.
- QuantumScape Corp. (NYSE: QS), a battery company that has one of the most advanced solid-state lithium metal batteries of all time.
- Luminar Technologies Inc. (NASDAQ: LAZR), a LiDAR technology company helping to bring autonomous cars to the masses.
- DraftKings Inc. (NASDAQ: DKNG), one of the largest online sports betting platforms in the country.
They all have one thing in common, they didn’t go public through the traditional IPO process you and I are familiar with. They went public in one of the hottest ways of 2020, through a special purpose acquisition company (SPAC).
These SPACs, also known as blank check companies, many of which are run by high profile investors, raise capital as a public shell company and then acquire a private company. This helps to bring a private company to public markets much faster than any other route.
There are three big benefits to you and me here. You get to invest alongside some prolific investors, you have the opportunity to get in on the ground floor of the most innovative companies, and you can get into newer companies because young companies typically don’t go to public market right away.
Just look at recent traditional IPOs like AirBnb and DoorDash. Their stock prices rocketed up over 100% before they even hit public markets and never gave investors a chance to get in at a reasonable price. All the big gains went to hedge funds and venture capital companies.
This is why I like SPACs so much. It gives investors a chance to get in early. Just look at Quantumscape Corp. There was an opportunity for anyone to get in at $10 and now it’s trading over $90 in less than a month.
This would have never been possible had they gone through the traditional IPO route, where investment bankers would have taken their cut and then hedge funds getting early allocations of stock before it hits the markets.
Now, I’ve been interested in this market for a while and when Don Yocham, Executive Director of the National Institute for Cannabis Investors and I sat down to talk about SPACs I was immediately impressed by his knowledge of these markets. You can listen to his thoughts here.
One of the companies he brought up was Collective Growth Corp. (NASDAQ: CGRO), a $150 million SPAC led by Bruce Linton, the co-founder and former CEO of one of the largest cannabis companies in the world, Canopy Growth Corp. (NASDAQ: CGC). He talked about the great opportunity to invest alongside a world class investor.
A few months later Collective Growth Corporation announced that they are in talks to merge with Innoviz Technologies, an Israeli Lidar startup backed by some of the largest automotive companies in the world.
The stock jumped almost 40% on the news and once the merger is complete, they could continue to run. This technology could be the key to self-driving cars and BMW among others is already working with them.
Now I’m even more excited for the next deal that Don Yocham is presenting to us from Bruce Linton. The most successful cannabis entrepreneur of all time wants you to join him on his next venture.
This is a man who launched the first public cannabis company seven years ago, grew that company over 75,000% within six years, and turned 200 people into millionaires with the company’s stock.
And now he’s planning to do it all again. The best part about it is it’s just $1.75 per share. Find out how to invest by clicking here.