Are These The Best SPAC Stocks To Buy Right Now?
The year 2020 has witnessed several reversal trends in the stock market. In particular, many would agree that it was also the year of the special purpose acquisition company (or SPAC), or many would call it the blank check company. With the capital raised, a SPAC then identifies a private company to merge with. This essentially provides a faster way for private companies to go public, without the traditional, more lengthy IPO process.
If you have only gotten to know SPACs recently, there’s a great chance you’ve heard of QuantumScape’s (QS Stock Report) or Switchback Energy Acquisition’s (SBE Stock Report) stellar performance this year. Make no mistake, not all SPAC stocks could generate this magnitude of return in such a short period of time. While many SPACs have brought good returns to shareholders in recent months, we don’t know if the music can go on forever. But one thing we know thus far is that SPAC stocks have been generating great returns for shareholders (at least in the initial stage).
2020: A Breakout Year For SPAC IPOs
According to Yahoo Finance, SPACs make up most of the growth in the U.S. IPO market in 2020 compared with the year-ago level. This year saw 237 SPACs going public, raising nearly $80 billion in gross proceeds. On average, the SPACs raised $337 million each. That is a staggering jump from the 59 SPAC IPOs in 2019 which raised $13.6 billion. In fact, SPACs have raised more money this year in comparison with traditional IPOs. I’ve got to admit that this is surprising news to me. According to Business Insider, traditional IPOs raised $67 billion this year. Considering the popularity of SPACs this year, I am guessing the party could very well continue in 2021.
Moving forward, the outlook for SPACs could be bright and if the economy continues to improve, SPACs in 2021 could generate returns of similar magnitude like they were in 2021. With all that in mind, let’s take a look at these SPAC stocks that have been performing well in 2020. Could they do just as well in 2021?
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Best SPAC Stocks To Watch Right Now: Foley Trasimene Acquisition II
Foley Trasimene Acquisition II (BFT Stock Report) is a trending SPAC stock in the market. There’s no specific news that sends BFT stocks higher this week. So, instead of trying to find the reasons behind the actions, let’s see what the company could offer to investors.
The company aims to dominate the U.S. gaming market with payment solutions Skrill and Neteller (formerly known as Moneybookers) through the acquisition of Paysafe Group. Paysafe is a global online payments platform, processing nearly $100 billion of transactions a year. The real play here is U.S. gaming. With online gambling increasingly getting legalized, there could be a big opportunity here. The offerings from the company are fairly convenient if you like online gaming. What’s more, Paysafe counts notable private equity firms Blackstone Group and CVC Capital Partners among its shareholders.
Last week, Paysafe announced that Microsoft (MSFT Stock Report) will be enabling Paysafe’s Paysafecard as a payment option in Microsoft Store and Xbox.com in 22 countries across Europe. The Paysafecard enables consumers to purchase goods and services online using cash, without the need for sensitive data such as bank account or credit card details. Considering the company’s growth prospects, is BFT stock the best SPAC stock to tap on the rise in fintech?
Best SPAC Stocks To Watch Right Now: Fisker Inc.
Amid the EV revolution, chasing the high price tag of Tesla need not be the only game in the stock market today. Investors that have been looking for the best EV stocks to buy are starting to pay more attention to Fisker (FSR Stock Report), which went public via a SPAC merger in October 2020. Of course, FSR stock is trading only at a fraction of Tesla’s stock price. As you may or may not know, in October, Fisker finalized a manufacturing agreement with contract manufacturer Magna International (MGA Stock Report) for its Fisker’s Ocean SUV.
Fisker was founded by Danish automotive designer Henrik Fisker. He is best known for designing luxury cars such as the legendary BMW Z8 and Aston Martin DB9. Fresh of its merger with Spartan Energy Acquisition, investors are now anticipating Fisker’s brand of EVs. With the completion of the merger, Fisker has in excess of $1 billion of cash on the balance sheet. This will fully fund Fisker’s operations and development of the Fisker Ocean SUV. Since going public on the New York Stock Exchange, the stock has reached a high of $23.63 in late November before the recent correction. Now, could FSR stock be one of the most exciting SPAC stocks to watch going forward into 2021?
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Best SPAC Stocks To Watch Right Now: DraftKings
With sports betting becoming a multi-billion dollar business, online gaming giant DraftKings (DKNG Stock Report) is in an excellent position to benefit from the shift to online casinos. And as more states begin to loosen gambling laws, DraftKings will be there to profit. What’s more, since the pandemic, there has been an increasing trend in placing bets online and DraftKings has been benefiting hugely. Research firm ResearchAndMarkets.com expects the legal online sports betting market to grow at nearly 15% per year through 2025.
For the uninitiated, DraftKings went public via a $3.3 billion merger with the SPAC Diamond Eagle Acquisition Corp. in April 2020. Since then, the stock has gained about 150%. The potential of online gaming is certainly there. For instance, New Jersey is the biggest online sports betting and gaming market. In October alone, sports wagers exceeded $800 million in the state. Now that many states face revenue shortfalls due to the coronavirus pandemic and wider budget deficits, the need to fill that gap is increasingly pronounced. And who knows? Online betting could probably be one of those sources.
There is an opportunity for the company to operate in more states going forward. Thus, it is not surprising that some analysts are increasing their revenue estimates for the company. They expect sales to more than double by 2022 to reach $1.2 billion. If things go on track, could DKNG stock be the best bet on the increasing popularity of online gambling?