A special purpose acquisition company (SPAC) is a company that has no commercial operations and is created to raise capital in an initial public offering (IPO) and use the cash to merge with a private company and take it public, usually within two years. According to data from SPAC Research, the market had a record year with more than $160 billion raised in the U.S. stock market in 2021, nearly twice the previous year's level. However, rising inflation, interest rate increases, and the risk of a recession have raised investor concerns among investors, who have pumped roughly $250 billion in SPACs, resulting in a significant decline in SPAC listings in 2022.
In addition, regulators are tightening their scrutiny of SPACs. The Securities and Exchange Commission has opened multiple investigations into SPACs and is recommending tighter rules. According to SPAC Research, nearly 90% of the companies that completed SPAC mergers during 2020 are now trading below the initial listing prices.
SPAC stocks Hims & Hers Health, Inc. (HIMS), Clover Health Investments, Corp. (CLOV), and BARK, Inc. (BARK), which each went public in 2021, are down more than 60% in price since their market debuts. So, we think they are best avoided now.
Hims & Hers Health, Inc. (HIMS)
San Francisco-based HIMS is a multi-specialty telehealth platform that connects consumers to licensed healthcare professionals. The company offers a range of health and wellness products and services available to purchase on its websites and mobile application directly by customers.
HIMS began trading publicly in 2021 on the NYSE after completing a reverse merger with the blank-check company Oaktree Acquisition Corp. Closing its last trading session at $4.25, the stock has declined 72.04% in price since going public in January 2021.
For the first quarter, ending March 31, 2022, HIMS’ loss from operations amounted to $16.92 million, while its net loss came in at $16.25 million. The company's EPS stood at $0.08 over the period. Its net cash used in operating activities increased 21.7% year-over-year to $19.40 million.
HIMS' consensus EPS is expected to remain negative in the second quarter, ending June 30, 2022.
HIMS' POWR ratings are consistent with this bleak outlook. The company has an overall D rating, which translates to Sell in our proprietary rating system. The POWR Ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree.
HIMS is rated a D for Sentiment, Value, and Stability. Within the D-rated Medical - Services industry, it is ranked #72 of 86 stocks.
To see additional POWR Ratings for Growth, Quality, and Momentum for HIMS, click here.
Click here to checkout our Healthcare Sector Report for 2022
Clover Health Investments, Corp. (CLOV)
Headquartered in Franklin, Tenn., CLOV functions as a Medicare Advantage insurer in the United States. Along with its Clover Assistant, the company delivers a software platform that provides preferred provider organization and health maintenance organization health plans for Medicare-eligible consumers.
CLOV made its market debut on Jan.8, 2021, after a merger with a SPAC led by Chamath Palihapitiya. Closing the last trading session at $2.53, the stock is currently down 84.1% in price since its market debut.
During the first quarter, ending March 31, 2022, CLOV's loss from operations amounted to $87.30 million, while its net loss grew 55.5% year-over-year to $75.31 million. Its total operating expenses increased 201.1% from its year-ago value to $961.68 million.
CLOV's consensus EPS estimate is expected to remain negative in the second quarter ending June 30, 2022.
CLOV's poor prospects are also apparent in its POWR Ratings. It also has an F grade for Stability. CLOV is ranked #9 out of 11 stocks in the A-rated Medical - Health Insurance industry.
Click here to see the additional POWR Ratings for CLOV's (Growth, Sentiment, Value, Quality, and Momentum).
BARK, Inc. (BARK)
New York City’s BARK is a dog-centric company that provides products, services, and content for dogs. It has two operational segments, Direct to Consumer and Commerce. The company serves dogs through monthly subscription services. It also designs playstyle-specific toys, satisfying treats, personal meal plans with supplements, and dog-first experiences designed to foster the health and happiness of dogs.
BARK made its NYSE debut on June 2, 2021, having completed a merger with a blank-check company, Northern Star Acquisition. Closing its last trading session at $2.00, the stock has declined 81.2% in price since its listing.
BARK's loss from operations increased 791.4% year-over-year to $34.85 million for the fourth quarter, ending March 31, 2022, while its net loss and comprehensive loss increased 420.3% from its year-ago value to $36.71 million. Its net cash used in operating activities grew 778.5% from its year-ago value to $172.34 million for its fiscal year ending March 31, 2022.
BARK's consensus EPS is expected to remain negative in the first quarter ending June 30, 2022.
BARK's weak fundamentals are reflected in its POWR ratings. The stock has an overall D rating, which equates to Sell in our POWR Ratings system. The stock has an F grade for Stability and a D grade for Sentiment and Growth. In the C-rated Specialty Retailers industry, it is ranked #40 of 45 stocks.
In addition to the POWR Ratings grades I have just highlighted, you can see the BARK's Momentum, Value, and Quality rating.
HIMS shares were trading at $4.23 per share on Friday morning, down $0.02 (-0.47%). Year-to-date, HIMS has declined -35.42%, versus a -12.64% rise in the benchmark S&P 500 index during the same period.
About the Author: Spandan Khandelwal
Spandan's is a financial journalist and investment analyst focused on the stock market. With her ability to interpret financial data, she aims to help investors evaluate the fundamentals of a company before investing.
3 SPAC Stocks Down More Than 60% Since Going Public StockNews.com
