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Downward arrows over a dollar bill. Illustration: Shoshana Gordon/Axios

SPAC enthusiasm is slowing, as evidenced by rising redemption rates.

Between the lines: "Redemption rates are very much a barometer of market sentiment," explains SPAC Research founder Ben Kwasnick. Higher redemption rates mean that investors are skeptical of the market and the deals — choosing to pull their money instead of risking losses if the stock price dives.

By the numbers: In July, the majority of SPAC deals saw redemption rates north of 50%.

  • About a quarter of them had redemption rates of 80% or above.
  • That’s in sharp contrast with the period between October 2020 and March 2021, when most had 0% redemptions.

Yes, but: Investors are still voting to approve most mergers — even if they're redeeming their shares for those very same deals — a behavior that's concerning some experts.

The big picture: "We’re digesting a really long period of over-exuberance, and there’s an oversupply in the market," Kwasnick tells Axios, adding that there’s decreased demand for SPAC IPOs.

  • And one byproduct of this weakened demand has been an uptick in sponsors getting anchor investors for their IPOs, often by offering them more favorable terms and even some of their own founder shares.
  • "I’ve heard if you can bring the implied cost basis down to $9.50 for anchor investors, they’re usually willing to buy 10% of your IPO," an industry source told Axios.

Meanwhile: The market is also less attractive for PIPE investors.

  • During the boom, when SPAC common shares were trading above their IPO price, participating in a PIPE often meant guaranteed gains.
  • But that dynamic’s changed with many SPAC stocks trading below their IPO prices.
  • So while the ratio of PIPE size to a deal’s minimum cash requirements was at 100% back in February, according to SPAC Research data, it came down to 60% by July.

The bottom line: The SPAC winter is here.

Go deeper

Sweetgreen stock soars after its IPO, valued at $5.5 billion

Illustration: Sarah Grillo/Axios

Salad restaurant chain Sweetgreen was valued at $5.5 billion when it began trading as a public company on Thursday.

By the numbers: The Los Angeles-based company priced its IPO shares at $28, which was above its proposed $23-$25 offering range, for a $2.98 billion market value. It then didn't begin trading until after 1:30pm, opening at $52 per share.

Airlines call for Biden admin's "immediate intervention" in 5G deployment

Photo: Tayfun Coskun/Anadolu Agency via Getty Images

The CEOs of leading U.S. air cargo and passenger carriers on Monday warned the Biden administration there could be "catastrophic disruption" after AT&T and Verizon deploy a new 5G service this week.

Driving the news: They said in a letter to Transportation Secretary Pete Buttigieg and other top federal officials ahead of the C-Band 5G service's deployment Wednesday that "the nation's commerce will grind to a halt" and "could potentially strand tens of thousands of Americans overseas."

Updated 3 hours ago - Energy & Environment

Thousands without power as "hazardous" winter storm lashes East Coast

Satellite imagery of the Northeastern U.S. taken by NOAA on Jan. 17. Photo: NOAA

A major winter storm lashed much of the East Coast Sunday and Monday, causing widespread power outages and disrupting travel over the holiday weekend.

The latest: Authorities in North Carolina confirmed that two people died in a car crash and that they responded 600 vehicle accidents during the storm on Sunday, per the Washington Post.