Thimble Point joins growing ranks of so-called SPACs that go public despite owning nothing
These are strange days for the stock market. You can take a company public without actually having a business, customers, or revenue. And if you’re Woody Benson, you can do it from the master bathroom of your home in Bonita Bay, Fla., showing slides over Zoom to prospective investors.
The reason is the resurgence of a financial entity called a SPAC, or special purpose acquisition company, sometimes called a “blank check company.” The game plan is to raise money first, go public, and then spend that money (and often more that you raise later) to acquire a promising company that wants to be public but would like to take a shortcut to obtaining its ticker symbol.
It’s the path taken by DraftKings, the fantasy sports gaming company in Boston, and Desktop Metal, a maker of 3-D printers in Burlington. Their stocks have increased in value since they’ve debuted, with DraftKings up more than 200 percent. If you had owned stock in Diamond Eagle, the SPAC entity that eventually acquired DraftKings (which was trading at around $10) or even bought it after the combination happened last April, you’d have enjoyed a pretty good ride: DraftKings trades at around $60 now.
Source: Boston Globe – Betting on ‘blank check’ companies