May 24, 2021
Happy Monday! I am here in your inbox while Courtenay takes a break before the unofficial start of summer.
Situational awareness: Lordstown Motors shares fell more than 9% after hours after the company reported first-quarter results and said it needs to raise "additional capital."
🔔 The dashboard: The S&P 500 ended the day 1% higher.
- Biggest gainer? MGM Resorts International (+5%).
- Biggest decliner? Cimarex Energy (-7%) and Cabot Oil & Gas today agreed to merge in an all-stock deal.
Today's newsletter is 755 words, about a 2½-minute read.
1 big thing: SPACs go to Congress
House lawmakers targeted SPACs during a hearing today following a year of unprecedented deal activity, Axios’ Hope King writes.
Why it matters: Congress may decide to draft new legislation that would take away one of the advantages of going public through SPACs versus a traditional IPO — the ability to make forward-looking statements.
- The SEC has signaled it could do the same.
What they're saying: Stephen Deane of the CFA Institute testified that the safe harbor rule governing what you can say about the future is a “singular regulatory advantage” that SPACs have over IPOs.
- Andrew Park of Americans for Financial Reform also testified that because SPACs are not subject to the same liabilities for making false and misleading forward-looking statements, the method has “emboldened” pre-revenue companies (electric vehicles, cryptocurrency, space exploration) to make “what might generously be called very rosy projections.”
- “What’s most concerning is that retail investors are buying into this kind of hype,” Park added.
By the numbers: The witnesses cited how much SPACs have underperformed their peers or the broad market.
- Park pointed to a Goldman Sachs index of 200 SPACs that saw average losses of -17% compared to a 10% return in the S&P 500 this year.
- Deane noted that for every year since 2010, the one-year post-merger performance of SPACs has underperformed the Russell 2000 by 10% or worse.
The big picture: Congress is concerned about protecting retail investors, a theme that has been present since the meme stock trades earlier this year.
What to watch: Even with the growing scrutiny, SPACs aren’t dead. They’ve just been slower coming to market given the existing backlog of reviews.
2. Charted: Latest risk to global semiconductors
After relaxing airline crew quarantine rules, Taiwan has seen a spike in coronavirus cases — without having any access to vaccines, writes Axios' Felix Salmon.
Why it matters: The vaccine question in Taiwan is geopolitically fraught. Without access, pressure will increase on the government to implement a hard lockdown. That could shut down vital semiconductor production just when the world needs it most.
3. What's moving
🎬 Amazon is reportedly closing in on a deal to acquire entertainment icon MGM Studios for close to $9 billion as the e-commerce giant aims to beef up its streaming business. (WSJ)
🍊 Florida today became the latest state to halt participation in the federal government's enhanced unemployment benefits program. (Forbes)
💵 Tesla faces a $163 million payout to drivers in Norway after a court found that a software update slowed down charging times in certain Model S vehicles. (Tech Crunch)
4. ✈️ Free flights for a year
United Airlines is joining the list of large U.S. companies throwing their weight behind vaccinations, Axios’ Kate Marino writes.
Why it matters: The U.S. vaccination rate is slowing, with just 62% of adults having received at least one shot. The Biden administration has asked private-sector companies to help the effort.
What's new: United announced today a sweepstakes in which loyalty program members can register to win free roundtrip flights.
- All they have to do is upload their vaccination records to the airline's website or app.
Details: During June, United will give away 30 pairs of round-trip tickets — in any class — to anywhere the airline flies.
- United will also randomly select five people to win unlimited free travel for themselves and a companion for an entire year.
5. Pandemic causes retail trend 'tsunami'
One of America's largest shopping mall landlords says that the pandemic accelerated and amplified retail trends that already existed, rather than creating new ones, writes Axios' Dan Primack.
Why it matters: The pandemic had more lasting impacts on retail than just which stores survived or perished.
- "Take the trend of 'buy online, pickup in-store,' or what we refer to as BOPIS ... which we thought would ultimately be the most efficient form of last-mile fulfillment for e-commerce," Adam Ifshin, founder and CEO of DLC Management Corp., tells the Axios Re:Cap podcast. "We thought it was a nascent trend pre-pandemic and it's become a tsunami."
Saving small biz: Ifshin adds that DLC provided rent deferrals for hundreds of small business tenants, via a quickly constructed program for local businesses with five or fewer locations.
- "With some people, we cut deals ... extend your lease and we'll forgive what we had agreed to defer," he explains. "To be completely candid, the local tenants were great. The nationals were much more challenging."
Listen to Axios Re:Cap all this week for a special series on America's small business comeback. Subscribe for free.
6. What they're saying
"Bitcoin’s greatest risk is its success.”— Ray Dalio, billionaire founder of the world’s largest hedge fund, Bridgewater Associates, speaking at a recent Coindesk conference.
Thanks for reading. If this email was forwarded to you, sign up here.
Send tips, or feedback to [email protected] or follow me on Twitter @AjaWMoore.