Hi Reader, here's what you need to know for April 12th in 3:09 minutes.

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Today's big stories

A crucial source of funding for SPACs is disappearing, which could cause the boom to fizzle out
There's a big new crypto play coming to town next week – Read Now
Analysts were caught off guard after the currency notched its best performance in three years last quarter

Checked Out

What’s Going On Here?

The special-purpose acquisition companies (SPACs) trend is at risk of petering out, as investors stop giving the “blank check companies” the not-so-blank checks they desperately need.

What Does This Mean?

SPACs – listed shell companies that merge with unlisted companies to fast-track their arrival on the stock market – are hugely popular among investors right now. So popular, in fact, that the number of SPACs listing on stock markets last quarter, as well as the amount they raised from investors, topped last year’s grand totals.

But private investors are starting to get overwhelmed by the sheer number of opportunities. SPACs, after all, don’t just raise money from public investors when they first list on the stock market: they typically look to institutions for more money once they’ve identified which company they want to merge with. Now, though, SPACs are reportedly struggling to find those investors, which only want to do so many deals at a time. And it’s showing: there have only been four SPAC launches in the first week of April – down from 41 in the first week of March (tweet this).

Why Should I Care?

For markets: Regulators have made their minds up.
US regulators probably aren’t helping matters: they’d already advised investors against buying into SPACs based on celebrity endorsements, and shared their concerns about insider trading and lackluster research on the part of SPAC execs. And they really kicked the boot in last week, arguing that the lofty growth projections of SPAC-targeted businesses are “overstated at best, and potentially seriously misleading at worst”.

Zooming out: There’s life in the old SPAC yet.
Easy there, squirt: let’s not call time on the SPAC craze too soon. According to the Financial Times, ride-hailing and payment services company Grab is set to list via a SPAC that would value south-east Asia’s most valuable startup at $35 billion – making it the biggest SPAC merger ever.

You might also like: What’s so special about SPACs anyway?

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2. Analyst Take

Forget About Bitcoin: Coinbase Is The Next Big Crypto Play

What’s Going On Here?

Coinbase is one of the biggest hitters in the “cryptoeconomy”, and the crypto exchange is set to start offering shares publicly next Thursday via direct listing.

There’s a strong case for Coinbase being the hottest stock of 2021: it’s a fast-growing and already highly profitable company exposed to an enormous market in a disruptive industry.

Its revenue rose over 800% in the first quarter of 2021 compared to a year before, and its untapped market – not to mention its profit margin – is enormous.

But Coinbase’s reliance on crypto price movements makes it hard to forecast future revenue for the firm, and even harder to put a price on its own shares.

To evaluate the potential of Coinbase, you probably need to think more like an early-stage venture capital investor than a traditional stock market analyst.

So that’s today’s Insight: how to think about Coinbase, and whether the crypto exchange is worth your money.

Read or listen to the Insight here

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