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special purpose acquisition companies are hot way for firms to list public shares and an SEC loophole, maybe inadvertently helping some of them out.
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Spats, as they're known, are pools of cash raised from public investors with the intention of later buying a company.
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And in the past several months, the targets of many of these blank check companies are being referred to as pre revenue or in layman's terms.
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That means backs are buying companies that don't have any revenue.
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Yet many of these companies are in high growth areas, such as electric vehicles and payment systems, and so they're using projections to tell their story to investors.
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And they have all the appropriate caveats and fair warnings and disclosures.
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Investors know very well what they're getting into, and many of them are very sophisticated.
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But it differs from traditional initial public offerings, where companies that Onley have a strong track record of booking revenue typically, But they are also very apprehensive to say anything about their futures.
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Companies being bought by specs are partly emboldened because they have established filings with the SEC.
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I'll be it.
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Those filings are really just from the shell company themselves, but this technically gives them protection under safe harbor provisions.
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These provisions allow for executives to make forward looking statements about their companies so long as they're making them to investors in good faith.
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But they're really only protected if they have this established record filings with the SEC.
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And at least one case, the use of these projections at a company bought bias back is being litigated, so the technicality could come under scrutiny later.
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But for now, the company is being bought by specs are letting their projections fly, Yeah.