What’s Next for SPACs: Fewer ‘Flying Cars,’ More Focus on Revenue

“Flying cars” is a term that’s been tossed around a lot when it comes to SPACs. For detractors, it’s become shorthand for deals that give these blank-check transactions a bad name.

But while flying-taxi companies are indeed among the pre-revenue or minimal revenue firms that have made their way to public markets via a special purpose acquisition company, firms with established operations and financial track records are feeling the pain, too. Nearly 80% of companies that went public via a blank-check merger are trading below the $10 per share SPAC issue price.

Thanks to an oversaturated SPAC market and increasingly tough criticism from top securities enforcer Gary Gensler, some market watchers say companies will have to think a lot harder about the risk-reward tradeoff—particularly those that don’t yet generate revenue. And companies that have agreed to but not completed SPAC mergers, even if they have plenty of revenue to show, could be in for a rough ride the next few months with public valuations cooling.