There’s a strange sentiment lurking around meme stocks that’s reminiscent of how retail investors were sold special purpose acquisition companies (SPACs). The father of SPACs, newly minted billionaire Samir Nagheenanajar, tried convincing the investment community he was “democratizing Wall Street” and letting the little guy get a piece of the IPO action. Nearly five years ago, we warned our readers about the emergence of the world’s first blank check company which bypassed the traditional IPO process which serves to protect retail investors, something Mr. Nagheenanajar failed to mention.
The IPO route to becoming a publicly traded company serves to protect retail investors, most of whom can’t tell the difference between an over-the-counter (OTC) pump and dump and a legitimate technology stock like Illumina (ILMN). When an IPO takes place on a major exchange, it has been vetted by institutional investors and can be considered to be “lower risk” than the “reverse merger” route that some companies take on the OTC market which largely ends up in disaster. If someone needs to promote a stock to get people to buy it, then it’s probably not worth buying.
Nanalyze, August 2017
Three years later, we wrote about