A pair of special purpose acquisition companies are taking trading apps public amid weakness in that corner of equity capital markets, testing the willingness of their app users to buy into their business models.
Acorns Grow, which offers
That same day, shareholders approved the merger of Social Finance, known for its
Apps like Acorns, SoFi, Robinhood and Stash have made it easy for the average investor to buy and sell stocks, and they’re on the runway to go public amid resumption of trading mania for the likes of GameStop and AMC Entertainment Holdings, facilitated by their technology.
So far, based on the SPACs’ performance, the apps’ customers haven’t shown the same enthusiasm for their debuts as they have for their favorite meme stocks. Still, a show of support for these fintech-SPAC mergers could help revive the blank-check industry, which has suffered in recent months from lackluster post-deal performance and a regulatory clampdown. The De-SPAC Index, which measures the performance of a group of 25 companies that came from SPAC reverse mergers, is down more than 30% from its mid-February peak.
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Financial advisors and even competitors to Robinhood say the self-directed service has opened the door to new potential clients.
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The app offers investing and banking products to more than 4 million subscribers.
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The fund manager will provide investing and savings accounts and debit cards to 13- to 17-year-olds whose parents are clients.
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“I don’t think their users are going to have loyalty whatsoever for the platform,” said Michael Batnick, director of research at Ritholtz Wealth Management. “If the stocks debut favorably — cool. But if it’s a dud, retail investors are not going to prop it up. It’s just another ticker on a screen.”
San Francisco-based SoFi offers financial services including loan refinancing, mortgages, personal loans, credit cards and investing and deposit accounts. Shares are expected to list under the symbol “SOFI” on June 1. Irvine, California-based Acorns operates a saving and investing app. It will debut under the symbol “OAKS” after its expected tie-up later this year. Fintech firms like these have disrupted the financial services industry, a business that Social Finance has called a $2 trillion opportunity.
“Acorns-Pioneer looks like a decent deal,” given it’s a relatively high-profile company with a large customer following, said Julian Klymochko, a manager of a SPAC-focused ETF at Calgary-based Accelerate Financial Technologies.
Acorns and SoFi have financial giants backing them, including funds and accounts managed by BlackRock, Baron Capital, Chamath Palihapitiya himself, as well as Wellington Management.
What appears to be missing is a market reaction equal to that institutional backing, according to Matthew Tuttle of Tuttle Capital Management, the firm behind SPAC ETFs and the recently debuted FOMO ETF.
“The SPAC market desperately needs a win, and if it is Chamath who brings it in, then so much the better,” he said.
