How Chamath Palihapitiya’s SPACs Have Performed So Far
SPAC concerns have dragged down IPOE stock, but SoFi's growth could fuel a rebound. Will SoFi stock rise after the IPOE merger date?
April 8 2021, Published 9:52 a.m. ET
In 2021, Social Capital Hedosophia V (IPOE) stock is facing the same fate as many blank-check companies. IPOE stock is now down 39 percent from its 52-week high of $28.26 on Feb. 1. The IPOE SPAC is merging with financial services company SoFi. Will SoFi stock rise after the IPOE merger date?
Social Capital Hedosophia is a partnership between serial dealmakers Ian Osborne and Chamath Palihapitiya. The goal of the partnership is to create SPACs. Social Capital Hedosophia has already taken Virgin Galactic, Opendoor Technologies, and Clover Health public, and it has three more deals in the works.
Virgin Galactic’s stock performance after merging with IPOA
Virgin Galactic, a space tourism company, merged with Palihapitiya’s first SPAC Social Capital Hedosophia I (IPOA) in Oct. 2019. Virgin Galactic trades on the NYSE under the ticker symbol “SPCE” and has a market capitalization of over $6.9 billion. The stock fell 38 percent in the month after going public but is now 148 percent above its listing price.
Opendoor Technologies’ stock performance after merging with IPOB
In Dec. 2020, Palihapitiya’s second SPAC, Social Capital Hedosophia II (IPOB), merged with Opendoor Technologies, an online marketplace for buying and selling homes. The stock trades on the Nasdaq under the ticker symbol “OPEN” and has a market capitalization of over $11.9 billion. Opendoor stock rose 6 percent on its listing day but then lost 20 percent in the week after going public.
Opendoor stock is currently 34 percent below its listing price. However, the IPOB-Opendoor deal has still been a huge success, given IPOB’s IPO price of $10.
Clover Health’s stock performance after merging with IPOC
Clover Health, a health insurance company, is one of the fastest-growing Medicare Advantage companies. In Jan. 2021, Palihapitiya’s third SPAC, Social Capital Hedosophia III (IPOC), merged with Clover. The stock trades on the Nasdaq under the ticker symbol “CLOV” and has a market capitalization of $3.0 billion. CLOV stock rose on the listing day but has been fallen since then—it's down 56 percent year-to-date. Much of the decline can be attributed to Hindenburg Research accusing Clover of misleading investors by not revealing U.S. DOJ inquiries.
How will SoFi stock perform after merging with IPOE?
SoFi seems to be a up-and-coming fintech leader and could generate significant returns. Investors buying the future SoFi stock now are getting a better deal than those who purchased at the peak. At $17.20, IPOE stock is 39.1 percent below its peak but 72 percent above its listing price. According to Investor Place, IPOE's underlying value is $23.91 per share, or 39 percent higher than its Apr. 7 price.
What's the outlook for SoFi?
SoFi is expected to grow quickly over the next few years as it broadens its banking services. The fintech company projects its revenue to grow from $980 million in 2021 to more than $3.6 billion in 2025. In 2021, it expects to report adjusted EBITDA of $27 million, and it sees that growing to $1.2 billion in 2025.
