How do early-stage share prices of companies going public via SPAC change?

Question

I currently have a number of series C, non-voting shares (< 1000) in a company that would go public via SPAC on this Monday. Since the price of each unit of SPAC is always price at $10 per unit for the post-money valuation of $4-5B, I wonder how does this impact the price of common shares for early-stage investors? For example, if my cost basis for each share is $18 at post-money valuation of $1.9B, does it mean early-stage investors like me incur a loss of $8 per share? But then doesn't it mean almost all companies going public via SPACs would hurt the late-stage investors?

Answer 1

The IPO pricing of a SPAC at $10 is irrelevant to you as a target company shareholder. All that matters to you is what is being exchanged for your shares, i.e. how much cash (if any) and how many SPAC shares, at what price, for each of your target company shares.

Once the acquisition closes, you will own some SPAC shares that fluctuate in price like any other public stock. In fact, they likely fluctuated ever since the acquisition was announced.

As for taking a loss in the acquisition, certainly your SPAC sale could be at a lower valuation than the previous, private valuation of your shares. But you can't just subtract $18 from $10 to calculate the loss in valuation. You need to look up the terms of the acquisition.