Investor frenzy for Special Purpose Acquisition Companies (SPACs) over the past two years has quickly cooled, and as most travel companies went public through this process, their values plummeted since their debut on the stock market.
In fact, some major travel SPACs have lost an average of 65% or more of their value since their market debut.
A quick summary of the concept: These temporary investment vehicles offer an alternative financing method for companies seeking capital. A paper company with no business is formed by collecting funds from investors. The goal is to identify an acquisition target (often a private company) and quickly go public.
The appeal of this process is that it avoids the regulatory scrutiny and lengthy process often behind traditional initial public offerings (IPOs). SPACs were in play long before they became popular during the pandemic.
In 2020 and 2021, a wave of blank check companies has entered the stock exchanges, with eager startups seeking funding paired with rich investors eager to raise money.
Wall Street’s SPAC frenzy has waned in 2022. One of the reasons for this was increased regulatory oversight by US regulators. Another factor is the general market downturn in response to rising interest rates.
Below are specific results of some travel SPACs entering the market with enthusiasm.
Merger of Vacasa and TPG Pace Solutions trading under Nasdaq: VCSA
Vacasa, an Oregon-based startup that provides a full-service vacation rental property management platform, was one of the first SPACs in the travel industry to enter the market. The company has announced plans to go public in July 2021 by merging with his TPG-backed Blank His Check company.
At the time of the announcement, Vacasa was projecting multi-year revenue growth of 31% and the transaction implied a pro forma equity value of SPAC of approximately $4.5 billion.
The company went public on the Nasdaq Exchange in December 2021, with Class A common stock trading at approximately $11 per share. Today, the stock is about $1.45 per share.
Last year, the company reorganized its sales division in July 2022 and announced corporate layoffs in October 2022 that affected 3% of its employee base.
Vacasa reported soft and uneven guest bookings in its third quarter 2022 results, and expects this trend to continue in the fourth quarter with an uncertain range and duration.
Sonder’s merger with Gores Metropoulos II trades under Nasdaq: SOND
San Francisco-based Sonder was another short-term rental startup that jumped on the SPAC bandwagon. The company originally announced a merger with Gores Metropoulos II in April 2021 at a valuation of his $2.2 billion, after which he reported a loss of $54.6 million on his EBITDA, adjusted for 10/2021. In March he lowered the valuation to $1.9 billion. [earnings before interest, taxes, depreciation and amortization] Second Quarter Fundamentals and Changing Market Dynamics. The merger was completed in January 2022, and began trading common stock at $8.95 per share.
Following its debut on the market, Sonder expanded its sales team last April to step up negotiations with luxury properties in popular destinations.
The company announced a positive cash flow plan in June that would reduce annual cash costs by about $85 million and reported negative free cash flow of $39 million in the third quarter. The plan is focused on generating positive cash flow in the short term within 2023 without raising additional funding by slowing the pace of new unit signings and focusing on his RevPAR. increase. [revenue per available room, a key metric for hotels] initiative.
Approximately 21% of corporate roles, including Sonder’s chief technology officer, and 7% of frontline roles have been eliminated in this restructuring effort.
Merger of Amex GBT and Apollo Strategic Growth Capital, trading on NYSE: GBTG
The $5.3 billion merger of Amex GBT, one of the highly anticipated 2022 travel SPACs, and Blank Check vehicles backed by Apollo Management values the company at 9.5x 2023 pro forma adjusted EBITDA . The move comes after the company acquired Egencia, the corporate travel arm of his Expedia Group, in November 2021. SPAC’s Class A common stock and warrants debuted at about $8.37 per share in May in a volatile market.
$335 million pipe [private investment in public equity] traded at the same time. New investors such as Ares Management Corporation, HG Vora, Saber and Zoom join the existing stakeholder base such as Certares and Expedia Group.
SPAC reported a net loss of $73 million in the third quarter of 2022. Shares of Amex GBT are currently trading at around $6.33 on the open market.
The company’s chief revenue officer, Michael Quaranton, announced plans to step down from the position last December after 34 years at the company.
Merger of Mondee and ITHAX Acquisition Corp trading under Nasdaq: MOND
Announced in December 2021, the $1 billion transaction valued technology-first travel marketplace company Mondee at $842 million, or 10.5x its estimated 2023 organic EBITDA .
Similar to Amex GBT, the company also pursued a $50 million all-stock PIPE investment at the same time. This he expanded to $70 million in April 2022, adding his two new investors to the deal. The FT Times reported that the new subscribers are Travelport’s financial sponsors Elliott Management and Siris Capital.
The stock debuted on the market in July at $11.05 per share. It is now hovering around $10.10 following the market’s volatility over the past six months.
Mondee’s third-quarter report says it’s now focused on increasing adoption rates and increasing new revenue streams.The company announced the appointment of a new chief marketing officer in December to spearhead growth and next-generation travel technology solutions.
Merger of Selina and BOA Acquisition Corp to be traded under Nasdaq: SLNA
Selina has announced plans to go public at an enterprise value of $1.2 billion by the end of 2021, based on 1.9x estimated 2023 revenue. SPAC was originally scheduled to end in the first half of 2022, but was later pushed back to the third quarter. After the business combination was completed last October, the stock price he marketed at $9.75.
The price soared to nearly $37 per share on the second day of trading, but recovered within a few days. The stock price he flatted out at about $4 a share in November and now he’s about $3.20 a share.
Selina has signed or opened 16 new facilities in Australia, Greece, Israel, Mexico, Morocco, Portugal, Panama and the United States in the second quarter of 2022.
Merger of Getaround and InterPrivate II Acquisition Corp, trading under the NYSE: GETR
Getaround went public via the SPAC route at a $1.2 billion market cap valuation. The deal closed last month, and the stock plunged from $8.82 to $2.90 on the first day. This reflects general market conditions and headwinds in the digital rideshare space.
The carshare marketplace app originally began SPAC negotiations with Altitude Acquisition Corp.-backed vehicles in August 2021, seeking a valuation of $1.7 billion at that time through a PIPE investment.
The company’s latest investor presentation says it is in the early stages of long-term growth to strengthen its monetization. We plan to execute on our proven growth strategy and take advantage of the consolidation of OEMs and Uber and the return of mobility.
GETR’s stock price today is about $0.61.
SPAC performance table summary:
| Market debut | ticker | debut price | final close |
|---|---|---|---|
| December 7, 2021 | VCSA | $10.99 | $1.44 |
| January 19, 2022 | Songdo | $8.95 | $1.30 |
| 2022/05/31 | GBTGMore | $8.37 | $6.33 |
| July 19, 2022 | Mondo | $11.05 | $10.10 |
| October 27, 2022 | SLNA | $9.75 | $3.20 |
| December 9, 2022 | GETR | $8.82 | $0.61 |
Despite SPAC’s disappointing performance over the past two years due to the hype, TNMT, a travel and mobility technology market intelligence agency, writes that SPAC won’t go away. The shift in sponsorship attractiveness from growth to fundamentals and the new macroeconomic climate have investors keeping an eye out for different types of acquisition targets in their next move.
