Amrith Ramkumar
speaker
860 appearances
16 recordings
1 series
first heard May 2018
last heard Sep 2021
Amrith Ramkumar’s voice in public audio — every appearance, attributed to the second.
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These bets are very similar to bets on GameStop, AMC, and some of these other kind of distressed companies that carry that reputation on Wall Street.
Thanks so much for having me, JR.
The latest day trader SPAC craze really focuses on companies that recently closed SPAC mergers that had high investor withdrawals.
In the past, day traders focused on SPACs when they announced mergers.
Now they're waiting until deals close.
So SPAC investors get the right to pull their money out of the deal before it goes through.
And it's important to take a few steps back.
So they announce a deal and it typically takes several months for it to close.
If the SPAC shares are trading below its IPO listing price, many investors of all kinds typically will pull their money out if they don't want to be holding shares of the newly public company.
With SPAC shares in general falling lately, a lot of people are pulling their money out.
And that's a high withdrawal scenario that in the past would have sunk share prices.
But now day traders are targeting some of these risky companies and bidding up the shares.
These bets are very similar to bets on GameStop, AMC, and some of these other kind of distressed companies that carry that reputation on Wall Street.
So they see that a lot of investors have pulled their money out of the deals and don't want to hold them.
They see that companies that merge with SPACs are popular for short sellers, so they view it as maybe a way to squeeze the shorts by forcing the shorts to buy the shares when the shorts are trying to borrow them, sell them, and buy back at lower prices.
And the reality is it's often just a very chaotic scenario.
So we've seen the things that are trending on social media, the things that day traders target, they tend to vary.
And we've seen cryptocurrencies fall.
So some people have said that like the action is just moving a bit into this high withdrawal scenario.
And at the start of the year when SPACs were all the rage, withdrawals weren't really that large and this wasn't an option.
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