Latest / Bull Market Conversations with Fexingo: Rallies, Momentum, and Riding Market Strength / How Bull Markets Are Igniting the SPAC Comeback in 2026
Transcript
- Lucas: So SPACs — special purpose acquisition companies, blank-check companies — were basically a four-letter word on Wall Street by early 2022. Hundreds of them had gone public, most found no targets, and the ones that did merge cratered. Chamath Palihapitiya became a punchline. But here we are, July 2026, and SPACs are quietly staging a comeback. Luna: Quietly is the key word. I've seen a few filings land this quarter, but nobody's throwing a party about it. What's changed? Lucas: A few structural things. First, the bull market itself. When the Nasdaq is up over 2 percent in a single week, and growth stocks like Palantir jump 14 and a half percent — that kind of risk appetite filters down. Second, traditional IPOs have been choppy. The last couple high-profile listings got priced conservatively, and the pops were small. Companies see SPACs as a way to get more control over valuation and timing. Luna: But didn't we learn that control was an illusion? That sponsors were overpromising and underdelivering on projections? Lucas: Absolutely. That was the fatal flaw of the 2020-2021 SPAC wave. The projections were fantasy, the warrants were dilutive, and the retail bagholders got burned. But the SPACs I'm seeing now are different. Smaller trust sizes — under $300 million instead of a billion — and much more conservative revenue forecasts. They're also using performance-based earnouts rather than upfront sponsor promote. Luna: So the incentives are better aligned. But who's the target audience? Retail still remembers getting crushed on Nikola and Lucid. Lucas: Institutional. The new SPACs are being marketed almost exclusively to hedge funds and family offices. They're not chasing the moonshot; they're looking for established private companies that want a faster, cheaper path to public markets without the roadshow circus. Think of it as a streamlined IPO for companies that already have real revenue and a clear path to profitability. Luna: Give me an example. A company that fits that mold. Lucas: There's a SPAC called Venturi Growth II that filed last month targeting enterprise software companies with $50 million to $200 million in recurring revenue. That's a sweet spot. Those companies are too small for a traditional IPO — the underwriting fees would eat them alive — but they're too big to stay private. The SPAC trust gives them the capital and the listing, and the warrants give investors upside without the insane dilution of the old model. Luna: And the numbers back it up? I mean, the data we have today — the Russell 2000 is actually down half a percent this week while the Nasdaq is up 2.1. Small caps are struggling. A SPAC could be a lifeline for a mid-cap growth company. Lucas: Exactly. The Russell's underperformance tells you that capital is flowing to the big growth names — the ones already in the Nasdaq. Smaller companies have a harder time getting attention. A SPAC listing gives them a clean balance sheet and a narrative. Plus, with the Fed holding rates at 3.63 percent, borrowing is still expensive. Equity capital through a SPAC is cheaper than debt right now for these companies. Luna: And that brings us back to risk appetite. You mentioned Palantir's 14.5 percent weekly gain. That's not just a stock move — that's a sentiment signal. If investors are willing to chase a high-beta name like that, they're probably open to SPACs again. Lucas: Right. And while we're on the topic of risk appetite — it's worth mentioning that listener support is what keeps this podcast independent and ad-free. If our market conversations have helped you think about a decision differently, a couple of dollars a month genuinely makes a difference. Buy me a coffee dot com slash fexingo — that's all it takes to keep these episodes coming. Luna: Yeah, it's a small gesture that really adds up. We don't have sponsors, so we rely on people who find value here. Lucas: Exactly. And back to that risk appetite — you also saw prediction market volumes hit record highs this week, tied to the World Cup. That's another data point. People are hungry for event-driven bets. SPACs are, in some ways, event-driven bets on a company's future. The structure just has to be cleaner this time. Luna: So what's the catch? If this is SPAC 2.0, what could go wrong? Lucas: Two things. First, the new SPACs have shorter timelines — typically 18 months instead of 24. That puts pressure on sponsors to find a deal fast. If they rush, we could see bad matches. Second, the warrants are structured differently. Some have exercise prices that adjust downward if the stock trades poorly, which sounds good for investors but creates complexity. If the stock falls below a threshold, the dilution can still hit. Luna: So the mechanics are improved but not foolproof. And the macro backdrop matters. If this bull market falters, SPACs will be the first to get dumped. Lucas: Absolutely. They're a high-beta play on sentiment. But in a market where the S&P 500 is at 7,483, the Dow at 52,900, and growth names are ripping — the conditions are ripe. The key is that investors should treat these as what they are: venture capital with a public listing, not a guaranteed return. Luna: And look at the data from the prior SPAC wave. The average SPAC that merged in 2021 is still down about 60 percent from its peak. That's a scar. But the new deals are being structured to avoid those mistakes. I'm watching the redemption rates closely. If we see redemptions below 30 percent on the next few mergers, that's a vote of confidence. Lucas: Good metric. And there's another signal: the spread between the SPAC trust value and its trading price. In 2021, many SPACs traded above trust — meaning investors were pricing in the optionality. Right now, most new SPACs trade right at trust or a slight discount. That tells you there's no froth yet. That's healthy. Luna: So the smart play for a listener who's interested — what do they do? Buy a basket of SPACs? Wait for a merger announcement? Lucas: If you're going to dabble, I'd say wait until a SPAC announces a target, then evaluate the deal on its own merits. Look at the sponsor's track record. Look at the target's revenue growth and margins. And pay attention to the warrant terms — are they redeemable? What's the strike price? Don't just buy the SPAC at IPO because you think it'll find a good target. That's gambling. Luna: And if you're more conservative, there are SPAC ETFs now — they spread the risk across dozens of blank-check companies. They won't skyrocket, but they won't zero out either. Lucas: Right. The bottom line: SPACs are back, but they're not the same animal. The market learned from its mistakes, and the bull market is providing the oxygen. But as always, the details matter. Read the prospectus. Understand the structure. And don't assume that because the last wave was a disaster, this one will be too — or that it'll be a slam dunk. It's somewhere in between. Luna: And we'll be watching. If redemption rates stay low and the next few mergers hold up, this could be a real new channel for growth companies. If not, well — we'll have another cautionary tale. Lucas: Exactly. That's the fascinating thing about bull markets — they don't just lift prices. They reshape the financial architecture. SPACs are one example. We'll see what the next one is.