Evaluating offer with pre-SPAC stock
I got an offer at a company that is about to go public via SPAC. They obviously seem quite bullish about their stock, but my naive opinion is that most SPAC stocks go down pretty hard once they merge. I'd be getting $120k in RSUs over 4 years. It's not clear to me at what exchange rate these RSUs will convert when they merge. Normally I'd assume I should value the stock at less than face value, but in this case, is it possible that the $120k is based on some small number that is very likely to pop up once they go public? I'm pretty stupid when it comes to financial stuff, but is it safe to assume that this would be a much better deal than me just going and buying their pre-merge ticker at $10? Current TC: 210k YOE: 4.5 #spac #rsu #offer #compensation #stock
Most spacs fail to make a profit and most startups don’t take off. Your 120k has a higher risk exposure.
If the spac has ever traded above $10 then there is some chance it can go above or around $10 when the company becomes public. If it currently trades at $10 there’s a good chance it will go below that. FYI $10 is the reference price that the deal is consummated at and also the floor of the stock price before the deal is completed. You need to google “definitive agreement” and read the press release to see what the valuation was. Chances are the offer you’ve been given is based on the same valuation as the $10 ref price. If there are warrants on this spac then you can also check those out to see what the market sentiment is like. Anything under $2 means share price is likely to go under $10. There’s a lot more info to leverage like PIPE composition. Feel free to dm me if you want me to take a closer look at this spac for you
What is your thoughts on Circle.com spac?
The spac has traded above $10 since the deal was announced so it seems like the valuation is fair. It just needs to stay above $10 until the merger happens in Dec or Jan and everything will be good. I don’t know anything about the business model though. You’ll have to do your own research on the company.
If possible to share the company it may help people evaluate the stock. A percentage of spac companies do well after merging but most don’t.