SPACs are turning Wall Street into Silicon Valley
Feb 2, 2021
Episode 361

SPACs are turning Wall Street into Silicon Valley

HTML EMBED:
COPY
Money printer go brrr, etc.

Let’s set GameStop aside for a sec. We know, we know.

But there’s another hot, disruptive force in finance beyond r/WallStreetBets: special-purpose acquisition companies, or SPACs. They had a big 2020, attracting some huge names, and The Wall Street Journal reports an average of five new SPACs are popping up every day in 2021. Now the “stonks” crowd wants in. So what’s a SPAC?

“it’s just a pile of money. … It’s just money that’s sitting there to acquire a private company and take it public,” said Wall Street Journal markets reporter Amrith Ramkumar. “So a lot of startups have realized that this is an easy way to raise money and access public market investors. Basically, they get the SPAC’s spot on the stock exchange after the merger goes through.”

Once one of these so-called “blank check” firms takes a company public, day traders and other investors start buying up stock and driving up the price, and the SPAC’s creators get rich. Everyone’s happy … right? On today’s show, Ramkumar makes us smart on the promise and peril of SPACifying Wall Street.

Later in the show, listeners call in to tell us about getting the vaccine in Texas, the best GameStop memes and making the definitive “stonktail.” Find the recipe below, from former bartender and current Smartie Elizabeth in Buffalo, New York:

The stonktail: Add an ounce and a half of gin, an ounce of lemon shrub and ice to a cocktail shaker and give it a good shake and strain it into a glass. Top it with about two ounces of Prosecco. Garnish with rosemary and lemon twist, and enjoy.

Plus, ahead of her appearance at the Super Bowl, we remember when poet Amanda Gorman answered the Make Me Smart question.

When you’re done listening, tell your Echo device to “make me smart” for our daily explainers. This week: Groundhog Day, income tax and nachos. Also, don’t forget to subscribe to our newsletter! You can find the latest issue here.

Here are links to everything we talked about on the show today:

Finally: We need your voice memos! Tell us what you think of the show or ask a question for Kai Ryssdal and Molly Wood to answer! Here’s how to do it.

None of us is as smart as all of us.

No matter how bananapants your day is, “Make Me Smart” is here to help you through it all— 5 days a week.

It’s never just a one-way conversation. Your questions, reactions, and donations are a vital part of the show. And we’re grateful for every single one.

Donate any amount to become a Marketplace Investor and help make us smarter (and make us smile!) every day.

The team

Molly Wood Host
Donna Tam Interim Senior Producer
Tony Wagner Digital Producer
Marissa Cabrera Producer
Bridget Bodnar Senior producer