SPACs are about to EXPLODE | New Infinite Money Glitch

hey everyone meet kevin here in this

video we're going to be talking about

sparks and what sparked sparks and

comparing sparks to specs

yeah now

there's a lot here to digest but we're

going to make it really really easy

because i have a feeling these are going

to become just as popular as spax were

in 2020 at the beginning of 2021 and now

you're gonna start seeing these things

trading on markets called

sparks

and you gotta know what they are so

first to understand sparks you have to

understand specs remember that a spec is

really consistent of a blank check

company

that leaders or promoters and their

attorneys put together then they get a

pool of investors the pipe and they

raise money together usually at a par

value of ten dollars though sometimes

twenty dollars and the individuals who

invest get a share of this back at a at

whatever the par value is so ten dollars

or twenty dollars and there are also

warrants that people could invest in

which are basically just options call

options to be able to purchase more

shares at some point in the future when

the company itself calls for redemptions

now don't worry if you lost any of that

not that big of a deal but the most

important part is that a spac is just a

bundle of money

that is public

and it's looking to take an existing

company that's private public and so

they merge together and now they're

public together and then they change the

name and perfect you're done now you've

taken a company that wasn't public

public through this streamlined sec

review process known as a spac

it's had one heck of a reputation though

because a lot of specs ipo with these

investor presentations that aren't

exactly this realistic presentation of

what the company is likely to do but

instead there are a lot of opium about

what the company might do and because

they're specs they go through less

regulation so a lot of these performance

statements are accepted now here's the

thing

nasdaq has reported that on average the

first day that spax end up ipoing they

tend to run up about 18

obviously there are a lot of variables

here but that would be about a dollar

and 80

profit on average per share on ipo day

but now this is where things get fun

wouldn't you like the opportunity

to buy a potential spec

at whatever the ipo price is

so let's say for example dwack the

donald trump's back goes from ten

dollars to

fifty dollars wouldn't it be nice to

have the right to buy

shares at ten dollars that'd be pretty

cool right and since the average

expected ipo profit is a buck 80 it

would seem that the value of being able

to buy shares at an ipo price for a spac

would be somewhere between maybe a buck

80 and some larger number depending on

how valuable people think this ipo is

actually going to be

well that's where

sparks come in

special purpose acquisition

rights

and then a company

because remember a spac is a special

purpose acquisition company but a spark

is a special purpose purpose acquisition

rights company and bill ackman is going

to be one of the first to actually do

that through his pershing square capital

management company he has filed for the

first spark

now

if

instead of buying a spec where you get

shares you're interested in a spark

you're going to get the right to buy

shares of a company at ipo for zero

dollars and you're going to be able to

sh to trade that right on the public

market so that means on the public

market we're going to start seeing

sparks floating around at maybe five

dollars and that would mean you're

paying five dollars for the right to pay

ten dollars for that company

when it ipos now what's interesting is

the way this works is when the spark

finds a target company

it asks the investors for money to merge

however before it finds a company these

rights are assigned and they're allowed

to be trading on stock exchanges and

since sparks don't raise money in

advance there's really no fixed amount

of the sparks that could exist or these

rights to buy something at ipo price

basically it's a blank

blank check company

it's like literally like a blank check

company used to be hey here's

500 million dollars go find a company we

know we all paid in 10 per share

whatever go find a company and and bring

it public

now it's kind of like hey here are all

bill ackman's friends who are like sure

yeah we'll take your sparks

who can then if they want

sell these rights on the stock market

and then they'll have trading value

remember how much they're worth really

depends on how much the company is

expected to be ipoint for because all it

is is the right to buy the company at

the ipo price

so the way sparks are going to work

compared to specs specs you raise money

you find a company to merge with usually

within two years you pay the promoters a

big fee you get massive commissions like

this is how people like chamath get rich

off doing these spacks and boom the

company goes public like open door sofi

for example goes public people who got

in at ten dollars are doing great uh and

the people who who bought later or well

they're buying later they're investing

in an earlier stage company

now remember specs can also go below ten

dollars look at shift technologies look

at hippo uh look at uh you know any any

number of specs like a beachbody right

not a surprise these things can go under

ten dollars that's because oftentimes

they're overvalued at 10

now

investors

with a spark

have a cool opportunity where they're

not putting any money up

they have the right to buy shares thanks

to that spark unless they sell that

spark they have the right to buy shares

at ipo price and

they get a new spark for the next deal

that that manager puts together so it

kind of incentivizes you to actually buy

the shares at ipo because then you're

going to get another spark or the right

to buy the next deal

so

the cool thing here is

you'll at some point see these weird

instruments trading on the market that

are just basically rights to buy at ipo

price i expect them to be incredibly

speculative

but people are going to be likely very

excited about these because if they go

in on ipo price on on you know one time

they'll be able to do it again in the

future it's almost kind of like having

an nft right to buy these spacks or now

sparks at ipo which is kind of crazy

so now it comes down to really betting

on how good of a job you think the

promoter like somebody like bill ackman

will be able to do and how quickly do

you think he can pull it off and how

many times do you think he can pull it

off the cool thing is it's going to be

easy to market these acquisition rights

so for example if a potential

acquisition is announced and the spark

value starts trading at three or four

dollars then the understanding is that

hey investors must like this idea

because obviously it's worth uh whatever

we expect the ipo price to be plus three

or four dollars because maybe the

expectation is that it's gonna run even

beyond that so a potential acquisition

let's say it's announced with a spark

and then the value drops to like 25

cents or something really low this would

kind of be a sign that investors are

saying oh

that's probably not going to ipo well or

it'll fall after ipo like robinhood but

anyway the instant feedback could

actually end up being very valuable for

somebody like bill ackman the promoter

to see hey is it a good idea to be

bringing this company public or should

we potentially look for a different

company

you know if this one's not gonna work

out because maybe the market doesn't

like it so anyway of course all this

needs uh sec and regulatory approval and

right now

spax are not loved by the sec so we'll

see how sparks

the evolved form of spax end up working

out i mean i really feel like this is

like

uh a pokemon like a bulbasaur evolving

into blastoid like it's just continuing

to get more complicated and we continue

to get new

fangled ways of losing money and

becoming bag holders but

at the same time this could also improve

some of or at least improve on some of

the faults that the sec sees with spax

specifically with hey like what if the

company isn't worth

ten dollars at ipo what if it's worth

five dollars at ipo well whatever that

number is it could be a little bit more

of a floating valuation whoever has a

spark will have the right to be able to

buy it at ipo this is kind of cool we'll

see how the sec responds to this the

nyse so far seems interested in this but

pretty soon you could start seeing

sparks trading on the stock market and

now you kind of have a little bit of a

first look outline as to what the heck

these crazy things are and boy oh boy

this market is nuts thanks so much for

watching check out the programs linked

down below and building your wealth and

we'll see in the next one thanks bye