SPAC warrants are very cheap; death throes or time to load up?

After noticing some weird price action with SPAC warrants, used SpacHero to pull those with a target identified but that have not merged, that also have the lowest warrant prices. Turns out priecs have plummeted indeed, with a few went down hard even last Friday (1/28). 17 are below $0.30, and they haven’t even de-SPACed yet!

Can think of three reasons for a price drop in warrants:

  1. This comes with the negative sentiment associated with the SPAC winter we are in. People just hate SPACs at the moment. And these are the ones that they hate most.
  2. The market is already pricing in future drops in price of commons - much more so than it was before. Which is not unreasonable, since SPACs have almost universally fallen in value so recently.
  3. The market thinks these deals will not go through, and that the SPAC will be liquidated. At which point the warrants go to 0.

Taken as a portfolio though, I am having a hard time making sense of this. Given that warrants basically behave like like super-long-dated calls without the theta, #1 and #2 shouldn’t matter as much, as sentiment should return over time, and many of these companies could turn out to not be complete turds. Only #3 could justify this, though I can’t think of a case where the merger deal fell apart, and the SPAC got liquidated. (Each has happened separately.)

So the first set of questions are: What am I missing? What else could be explanations for prices to plummet like this? And for them to stay down?

Next, charted all the warrants with prices below $0.20 (arbitrary threshold…) and this is what the annual price movement looks like:

And this, as percentages:

Looking at these graphs, can’t help but feel like this is a temporary over reaction, and that prices will eventually go up, though probably not to previous highs. Warrants give us years of runway though. And they can’t go below $0 in price.

Because all SPACs are very risky, I wonder if it makes sense to take a portfolio approach, after weeding the truly terribad ones that should never have been conceived. So one could buy up a bit of the 8 that are priced below $0.20, the 17 priced below $0.30, or any combination thereof, and just wait.

So second question is: What do you think about this portfolio approach? Good way to play the risky field? Or is there a better way?

(The list, if anyone wants to play with this, is: AGBA, ALAC, VHAQ, CHPM, GBRG, GPCO, ACBA, VENA, BREZ, ESSC, MPAC, AACI, ARIZ, BIOT, KWAC, TUGC, FOXW)


This is certainly something we should look more into. To me (at 1AM with my glasses off) it really does seem as though the “SPAC winter” has potentially created some deals.

The portfolio approach makes the most sense to me as well given that it’ll likely be hard to nail down specifically which mergers are likely succeed.

Will do some further looking into these for sure.


Ran an update on the cheap-looking SPAC warrants since it’s been two weeks (orange line in image below), and the prices just keep falling.

The bottom is not in, yet.