SPAC Froth Turns on Itself With Stocks Plunging 20% in Two Weeks

About five blank-check companies went public per day this year
Selloff occurs as stock investors sour on speculative groups

Brenda Rainey, executive vice president of Bain's private equity practice, says SPACs are underperforming the S&P 500.Source: Bloomberg)

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By Vildana Hajric and Lu Wang (News)

March 4, 2021 at 4:37 PM UTC

This article is for subscribers only.

It may turn out that five new special purpose acquisition companies per day was too many.

SPAC mania is showing signs of hitting a stock-market saturation point, with an index tracking blank-check flyers suddenly down about 20% from its peak. The craze is being clipped as quickly as it whipped up, with sentiment souring on growth stocks amid a runup in interest rates and rotation into beaten-down names. Before the selloff, SPACs had almost doubled since October.