Should You Buy FUSE SPAC Stock Before It Finds a Merger Target?
Source: Fustion Acquistition Twitter / MoneyLion Facebook

FUSE SPAC Stock Surges on Rumors of MoneyLion Merger

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Jan. 29 2021, Updated 8:55 a.m. ET

Fusion Acquisition Corp. (FUSE) is a SPAC (special-purpose acquisition company) led by Jim Ross and John James. The blank-check company was formed with the focus of merging with private fintech companies. Should you buy FUSE stock before it finds a merger target?

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FUSE stock is trading at a 13.2 percent premium to its IPO price of $10, with no merger announcement. The stock rose 1.5 percent and closed at $11.32 on Jan. 28, and was up in premarket trading on Jan. 29 on rumors that the SPAC could take fintech company MoneyLion public.

Who owns the FUSE SPAC?

Fusion is led by CEO John James and chairman Jim Ross. James is the founder and CEO of fintech company BetaSmartz, while Ross is a former State Street Global Advisors executive. The FUSE SPAC raised about $305 million in a June 2020 IPO, selling 30.5 million units for $10 apiece.

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Should You Buy FUSE SPAC Stock Before It Finds a Merger Target?
Source: Pixabay

Which company will FUSE merge with?

Fusion is looking to merge with a financial technology company with an enterprise value of $750 million–$3 billion. Fintech companies Metromile, SoFi, Bakkt, Paya, and Katapult have all agreed to go public via SPAC deals.

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FUSE on Stocktwits

FUSE stock has become a major talking point on social media platforms. On Stocktwits, gezzer48 wrote that MoneyLion would be a good target company for FUSE to merge with, and expects FUSE stock to trade over $15 in the next few weeks. A user named TechFundInvesting also suggested buying FUSE stock on rumors of the MoneyLion merger, as FUSE could provide massive returns like the CCIV and IPOE SPACs. 

CCIV stock has risen about 50 percent on reports that it will be taking Lucid Motors public, while IPOE stock has risen over 30 percent on reports that it's merging with SoFi.

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Will FUSE merge with MoneyLion?

On Jan. 29, Bloomberg reported that FUSE is in discussions to bring MoneyLion public. Founded in 2013, MoneyLion is a mobile finance platform that offers lending, financial advisory, and investment services. The New-York based company is led by founder and CEO Diwakar “Dee” Choubey. MoneyLion has nearly 6 million users.

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In its latest funding round in July 2019, MoneyLion had a $1 billion valuation. The company’s investors are Greenspring Associates, MetaBank, Edison Partners, and Capital One Growth Ventures. A deal could be announced in the coming weeks if the talks are successful, according to people familiar with the matter. Representatives for Fusion and MoneyLion haven't commented.

Is it risky to invest in a SPAC before a merger?

Investing in a SPAC stock before a merger is risky because you don't know how your funds will be used or the SPAC's target company. There could be a long wait between buying the SPAC stock and when it acquires a company. Usually, SPACs have 18 to 24 months to find a target company. Investors get their money back if the SPAC can’t find a business to merge with. 

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