Once the acquisition is finalized, the SPAC changes its name to reflect the acquired company. Two notable examples of recent SPAC IPOs are Virgin Galactic Holdings (NYSE: SPCE) and Nikola Corporation (NASDAQ: NKLA). Real estate tech company OpenDoor is planning to go public through a SPAC shortly.
To invest, you can either buy shares of a SPAC before it has found an acquisition target or buy shares after a SPAC has announced a merger agreement.
Should you invest in an IPO?
Before you jump in and buy shares of an IPO, it’s important to realize that IPO investing can be volatile and risky. While some IPOs soar after going public, many don’t. Before you invest in an IPO, be sure you’re prepared to deal with some initial turbulence. You should also read the IPO prospectus (known as the S-1 in SEC terms) so you know exactly what you’re getting into.
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Read More: IPO Investing: How to Get In On the Ground Floor of Newly Public Companies |