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How to Avoid Getting Burned by Wall Street’s Hottest Money Machine

Billionaires, celebrities and hedge fund titans are all touting SPACs, or “blank-check” firms. Here’s what you need to know about the rewards and risks.

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Photographer: Michael Nagle/Bloomberg

At their peak, they looked like the A-list’s hottest new accessories. Alex Rodriguez got one. So did Colin Kaepernick and Shaquille O’Neal. Jay-Z was a fan, as was Serena Williams.

Special-purpose acquisition companies — better known as SPACs, or blank-check companies — made a splash during the Covid-era retail-trading surge. They are companies built with a single goal in mind: They raise money on the public markets by selling investors on a vision, and then buy a public company that fulfills that vision. SPACs let just about anyone with a wild idea, be it flying taxis or even space travel, and a bit of money raise hundreds of millions of dollars.