SPAC Deals Are Back, This Time With a Trump Bump

Business|Wall Street’s Riskiest Stock Deals Are Back, With a Trump Bump

Celebrity endorsements, companies with no clear plans, investors left feeling burned: The pandemic-era boom in risky investments called SPACs was an investment craze many would surely like to forget.

Well, it’s back. There has been a flurry of SPAC deals announced in the past month, and the most sought-after ones involve people in President Trump’s orbit or investments close to his heart.

One is being pitched by key executives from Trump Media & Technology Group. Another is backed by a key adviser to Saudi Arabia. The investment bank at the center of many SPAC deals is connected to the Trump administration’s commerce secretary.

Many SPACs that have come to market in the past few weeks are targeting cryptocurrency or blockchain companies — a part of the market where Mr. Trump and members of his family have been particularly active.

SPACs, or special purpose acquisition companies, are inherently speculative. They allow people to raise money in the stock market, without a business plan. Instead, the executives usually have two years to acquire a business with the funds they raised, or they have to give the money back.

In the years after the start of the Covid-19 pandemic, when risky investing seemed to be its own form of entertainment, SPACs became a $200-billion-plus phenomenon. By 2021, the busiest year for these deals, 613 SPACs were floated on the stock market, raising $163 billion, and it seemed almost anyone with any name recognition was flogging one — including celebrities and athletes like Jay-Z, Alex Rodriquez and Shaquille O’Neal; former politicians like Paul Ryan and Bill Frist; and high- and low-profile billionaire financiers.