Special purpose acquisition companies are one of the hottest trends on Wall Street right now. And there’s no one hotter than Chamath Palihapitiya, the so-called King of SPACs. Social Capital Hedosophia IV (NYSE:IPOD) is one of Palihapitiya’s suite of six different SPACs. And, so far, IPOD stock is off to a good start. It’s jumped from its initial $10 offering price to near $15 now.
However, IPOD stock may fall a victim to Chamath’s own success. The man has a ton of deals going at the moment. I discussed this in detail in my recent coverage of his Social Capital Hedosophia Holdings Corp. VI (NYSE:IPOF).
Chamath has IPOD stock, IPOF stock and Social Capital Hedosophia Holdings V (NYSE:IPOE) all either looking for or in the process of closing SPAC deals right now. Plus, he’s already completed the first three IPO series SPACs, which turned into Virgin Galactic (NYSE:SPCE), Opendoor (NASDAQ:OPEN) and Clover Health (NASDAQ:CLOV).
As if that weren’t enough, Chamath is working on other public investments as well. We got a reminder of this on Wednesday. On his Twitter account, Chamath announced not just one but two new private investment in public equity (PIPE) deals. Not surprisingly, IPOD stock slipped as traders priced in a slower timeline for the SPAC given his work elsewhere.
Revolution Acceleration SPAC
First up, Chamath announced that he is leading the PIPE deal for the Revolution Acceleration Acquisition (NASDAQ:RAAC) SPAC. Revolution Acceleration will be buying Berkshire Grey, a leader in the warehouse robotics space.
As you may recall, this is a hot category. Amazon (NASDAQ:AMZN), for example, bought Kiva years ago and that was instrumental in building out its logistics advantage. Now, Berkshire Grey offers the same sorts of capabilities to other leading retailers like Walmart (NYSE:WMT) and Target (NYSE:TGT). This looks like a promising deal for Chamath; RAAC stock popped as much as 20% on Friday.
ReNew Power & Proterra
As if that weren’t enough excitement for one day, Chamath gave his followers two more exciting pieces of news. One, he’s also leading another PIPE deal, this one into ReNew Power. ReNew will be merging with RMG Acquisition (NASDAQ:RMGB).
On his Twitter feed, Chamath hails this as the largest green energy company in India. He sees ReNew as a crucial leader in India’s path toward a more renewable energy future. And, if the company hits its 2025 growth targets, it looks cheap as well.
In addition to those two deals, Chamath is an investor in Arclight Clean Transition (NASDAQ:ACTC). That SPAC will be merging with Proterra, a maker of electric school buses. On Wednesday, it just announced a huge contract with a large Maryland school system. All in all, Wednesday was a momentous day for fans of the king of SPACs.
IPOD Gets Lost In The Shuffle
What’s the problem with all the good news I just detailed above? None of it involves IPOD stock. And, presumably, Chamath put a lot of time into putting together the ReNew Power and Berkshire Grey deals. And if he was busy doing due diligence on both those prospects, it probably means he had less time to work on finding targets for his own IPOD and IPOF SPACs. There’s only so much time in the day.
And, additionally, wouldn’t Berkshire Grey have been a cool acquisition for IPOD stock? This particular SPAC is designed to go after a target in the tech industry. Warehouse robotics would easily fit under that bill. Instead, that deal went elsewhere while holders of the fourth Social Capital SPAC continue to wait and see.
IPOD Stock Verdict
In my piece on IPOF stock, I suggested it was in a better place than some of the other options because of its broader deal mandate. That continues to apply. In theory, IPOD stock may get a big pop because it’s focused on the technology sector.
The odds are better that Palihapitiya can find an excellent deal target in technology than in, say, health care where his Clover Health deal has flopped. In practice, though, IPOD’s more specialized mandate may cause it to take longer to find a deal. In the meantime, Palihapitiya is announcing tons of other new deals seemingly by the day. This will seemingly cause IPOD stock to drop in the short run as traders sell this one due to the fear of missing out (FOMO) in his other deals.
It will be worth revisiting IPOD stock once it locks in on an actual deal target. For now though, there may be quite a wait before it comes up with a proposed deal. With that in mind, the stock is unlikely to do much in the near term.
On the date of publication, Ian Bezek did not have (either directly or indirectly) any positions in the securities mentioned in this article.
Ian Bezek has written more than 1,000 articles for InvestorPlace.com and Seeking Alpha. He also worked as a Junior Analyst for Kerrisdale Capital, a $300 million New York City-based hedge fund. You can reach him on Twitter at @irbezek.
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