SPAC rekindles hot tide: Trump and MAGA capital reignite Wall Street speculation fever.

In the last year of Donald Trump's first term as president, there was a surge in Special Purpose Acquisition Companies (SPACs), with hundreds of SPACs entering the market. After Joe Biden took office, his administration cracked down on these low-transparency investments, causing the surge to fade away. However, with Trump back in power, SPACs have made a comeback. Since the November election, sponsors of SPACs have raised over $24 billion, easily exceeding the total raised in the past two years. Many of these SPACs have connections to Trump's inner circle. Brandon Lutnick, son of the US Secretary of Commerce, Devin Nunes, CEO of Trump Media & Technology Group Corp. and former Republican Congressman, and Chamath Palihapitiya, a major donor who co-hosted a podcast with Trump's cryptocurrency czar, have all launched their own SPACs. Additionally, Trump's two sons are listed as advisors for a SPAC that aims to acquire a manufacturer that will "consolidate the US economic base." Currently, SPAC investments are focused on areas that align with the "America First" ideology: nuclear energy, quantum computing (both of which are key development areas for the current administration), and of course, cryptocurrency. "We know that Trump and his children are heavily involved in cryptocurrency," said Matt Tuttle, CEO of Tuttle Capital Management, managing $5 billion in assets. "These sectors are indeed performing well, but if a SPAC is launched without Trump's involvement, it's just the same old thing in a new package." A SPAC is a publicly traded shell company whose sole purpose is to raise funds and acquire a private company. The private company being acquired will then inherit the SPAC's listing status, providing a quicker path to going public than a traditional Initial Public Offering (IPO). While the concept of SPACs has been around for decades, they suddenly became popular in 2020, with celebrities, athletes, and Wall Street titans launching their own SPACs. As a large number of SPACs flooded the market, many began merging with poorly qualified companies, claiming that revenues would increase by up to 300 times. This phenomenon has led to crackdowns by the US Securities and Exchange Commission (SEC), and investors have sued SPAC sponsors for losses. The SEC under the Trump administration relaxed regulations, and figures from the MAGA camp quickly seized the opportunity. A SPAC led by Lutnick is planning to merge with Twenty One Capital, a bitcoin company affiliated with SoftBank Group and Tether Holdings. Another of Lutnick's six SPACs is set to merge with an institutional entity called Bitcoin Standard Treasury Co. to invest in bitcoin tokens. Palihapitiya has raised $3 billion for American Exceptionalism Acquisition Corp. A, a SPAC planning to acquire companies in fields favored by Trump, such as decentralized finance and artificial intelligence. Its stock price increased by 13% in the first few weeks of trading, making it one of the best-performing SPACs yet to announce a merger. Data shows that as of October 17th, more than a quarter of the 150+ SPACs that have submitted IPO applications or raised funds this year have targeted industries that align with the Trump policy agenda. University of Florida finance professor Jay Ritter mentioned several such deals: a collaboration between Trump's media company and a crypto holding company, and a merger between a SPAC and a gun startup (with little Donald Trump serving on the startup's board). "This is crony capitalism at work," he said, "The Trump family is clearly not bashful about their involvement in these transactions." White House spokesperson Kush Desai said in a statement, "The President's personal assets are held in trust managed by his children and are unrelated to his presidential decisions; at the same time, all members of this administration adhere to government ethics guidelines with the utmost seriousness." Those skeptical of SPACs warn that these investments are extremely high-risk: since 2019, only about 11% of companies that completed SPAC mergers are trading above their IPO prices, and dozens of companies have declared bankruptcy within just a few months of going public on the US stock market. Meanwhile, since the end of 2018, the S&P 500 has more than doubled, and the Nasdaq 100 has nearly doubled. "The success rate of SPACs does not match the level of risk," said Greg Martin, managing director of brokerage Rainmaker Securities, "These companies are likely ones that could not go public through conventional means."