About a year ago, we wrote a post on this blog, entitled A Sober Look at SPACs, which summarized an article we had written with the same title. Our research showed, among other things, that SPAC shares were highly diluted, that their post-merger performance was quite poor, and that sponsors’ returns were extraordinarily high. We have now updated that article here. In our update, we include a “Postscript” that responds to the most common criticism we received on our initial paper: that our data from January 2019 through June 2020 was outdated, that SPACs have changed (in a matter of months), and as a result “this time is different.” As Carmen Reinhart and Kenneth Rogoff have said in their book on financial crises, “More money has been lost because of these four words than at the point of a gun.”

In the months since we initially posted our research, the SPAC market experienced an extraordinary bubble. Much of what looked different during that time has since reversed itself. In this post, we summarize what has been different and what remains the same. On the whole, we conclude that this time is not different. SPACs remain highly diluted, and their returns remain poor.

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