Booming Blank Check Companies Are the Talk of Reddit and TikTok
Retail investors are pouring money into SPACS, which make it easier for a business to go public.
The SPAC boom that seemed to come out of nowhere in 2020 is still going strong. Billionaires, celebrities, and money managers are lining up to start special-purpose acquisition companies and hedge funds are clamoring to buy an early piece of them. Retail investors are piling in, with Reddit boards and even a corner of TikTok lighting up with discussions about these unusual stocks. SPACs, also known as blank check companies, are empty corporate shells that raise money from investors and then aim to merge with a private business, essentially taking that company public through the back door.
“This stock has the potential to double or maybe triple your money in 2021,” crowed one TikTok user, who donned a beanie as he walked users through his investment ideas over the sounds of electronic music. The SPAC he was hyping had recently announced a deal to buy a financial technology company. His video garnered almost 18,000 likes.