SPAC Stocks After the Hype: What Investors Should Really Track Post-Deal

There was a moment—late 2020 into early 2021—when every other pitch deck seemed to feature a SPAC option. Private companies from vertical SaaS to flying cars suddenly had an IPO alternative that bypassed traditional scrutiny. But what started as a liquidity shortcut quickly turned into a cautionary tale. By mid-2022, most SPACs that had de-SPACed were trading well below $10, with redemption rates climbing past 80% and retail enthusiasm drying up. The hype cycle was over. What remained was a new asset class of orphaned public companies with SPAC tickers, patchy fundamentals, and thin institutional coverage.

But here’s the catch: SPACs didn’t vanish—they evolved. Dozens of companies are still navigating public markets after merging via SPAC, and allocators now have a real track record to evaluate. The question isn’t whether SPACs were flawed vehicles. That’s settled. The more useful question is: what should investors track now that the hype is gone? What separates the SPACs that are trading near cash from the few that have found real footing post-merger?

This article breaks that down. We’re not here to rehash SPAC mechanics or overexpose Chamath tweets. We’re here to unpack what matters now—what signals are worth watching, how post-deal stocks behave, and where institutional investors are still paying attention.

From Promises to Performance: How SPAC Stocks Behave After the Merger Closes

The moment a SPAC deal closes—when the “de-SPAC” transaction is complete—the market resets. The ticker changes, the forward-looking slide decks vanish, and suddenly the company must trade on fundamentals. And that’s exactly where many post-SPAC firms began to unravel.

For starters, the average post-SPAC stock has underperformed significantly. According to data from PitchBook, SPACs that merged between 2020 and 2021 traded, on average, 50–70% below their $10 listing price by 18 months post-close. That drop isn’t just sentiment—it’s structural. Many companies were pre-revenue, cash-burning, or built on moonshot narratives that never translated into sustainable financials.

Redemptions also matter. When more than 70% of a SPAC’s investors redeem their shares pre-close (which became common in 2022), the company ends up undercapitalized on day one. That forces rushed PIPE raises, last-minute capital restructures, or immediate dilution—all of which erode post-merger value.

But not all SPACs cratered. SoFi, while volatile, managed to establish a multi-product fintech offering with real customer growth. DraftKings used its SPAC proceeds to solidify a first-mover advantage in online sports betting. These survivors had something in common: real operating momentum and strong pre-SPAC investor backing. In other words, they were public-ready, even if the route was unconventional.

Post-SPAC behavior, then, is a stress test. It reveals whether a company had an investor story or an actual business.

SPAC Valuation Metrics Post-Merger: What to Monitor Beyond the Hype

Once the de-SPAC transaction is complete, valuation metrics shift from narrative-driven to market-disciplined. The slides promising 60% CAGR and “multi-billion-dollar TAM” get replaced by earnings calls and 10-Qs. And this is where many investors struggle: what do you actually track in a post-SPAC stock?

Start with gross margin trajectory. It’s often a better signal than revenue growth alone. A company growing top line at 80% with declining margins is running uphill on ice. Clover Health, for example, saw explosive revenue expansion post-SPAC, but margin compression raised red flags about customer acquisition cost and unit economics.

Cash burn vs. capital runway is another vital metric. Many SPACs went public with enough cash to fund just 12–18 months of operations. If they didn’t raise a sizable PIPE or hit revenue inflection fast, they’re now flirting with dilution or debt. As of Q4 2023, over 60 SPAC-debuted companies had less than six months of runway, according to Sentieo.

Then there’s share count creep. Post-SPAC dilution is often misunderstood. Between warrants, PIPE conversions, and earn-out provisions, the fully diluted share count post-merger can balloon by 20–40% in a year. That affects everything—from enterprise value to per-share metrics—and often blindsides retail investors not reading the fine print.

Another overlooked signal? Customer concentration and cohort retention. Many de-SPACed SaaS or tech firms tout high ARR, but the quality of that revenue matters more. One B2B analytics firm that went public via SPAC in 2021 saw 70% of its ARR tied to three customers. When one churned in late 2022, the stock dropped 45% in a single day.

Instead of leaning on dream-year EBITDA (i.e., projected five years out), seasoned investors now anchor around actual operating leverage: is opex flattening as revenue grows? Can the business self-fund by 2025 without another raise?

A short checklist of what actually moves post-SPAC multiples:

 • Gross margin expansion vs. dilution

 • Recurring vs. one-time revenue mix

 • Real customer count and CAC payback

 • Capital structure clarity (including warrant overhang)

 • Whether the company hits or misses the first two earnings calls post-merger

When SPACs stop being stories and start being stocks, these are the numbers that hold weight.

Red Flags and Re-Ratings: How Institutions Now Evaluate Post-SPAC Companies

Institutional investors learned the hard way that many post-SPAC companies weren’t ready for the scrutiny of public markets. As a result, the bar has been raised sharply. The post-merger honeymoon is shorter, and the criteria for holding (or even initiating) positions are more disciplined.

First, there’s the lockup schedule. Many SPACs included short lockup periods for sponsors, insiders, or early PIPE investors. When those expire, secondary liquidity floods the market, often pressuring share prices. Analysts now model expected float increases based on unlock dates. If insiders exit aggressively at the first chance, that’s a confidence red flag—and the signal doesn’t go unnoticed.

Next, institutions focus on board composition and governance upgrades. Post-deal companies that retain SPAC-era boards with minimal industry expertise raise concern. Conversely, those that appoint seasoned operators or former public CFOs post-close signal maturity. For example, SoFi’s addition of experienced fintech board members helped shift perception from “SPAC stock” to “regulated finance player.”

Reporting cadence is another factor to pay attention to. Companies that repeatedly delay filings, guide vaguely, or avoid Q&A sessions on earnings calls tend to lose institutional support quickly.

Liquidity also matters. Thinly traded post-SPAC stocks, especially those with high redemption rates, can be uninvestable for large funds. If float is small and volatility is high, active managers will often avoid even if the fundamentals are improving. This leaves many post-SPAC companies in a liminal state: too small for institutional rotation, too public for private capital.

Another institutional lens is the ability to raise follow-on capital. Given how many post-SPAC firms are still loss-making, the market watches closely to see whether they can raise without painful dilution. Those that secure structured equity (e.g. convertible notes with anti-dilution terms) often get penalized. Conversely, a clean, oversubscribed PIPE or private placement signals staying power.

Finally, institutions track SPAC sponsor behavior. Repeat sponsors who walk away after the deal—or who are tied to multiple poor-performing de-SPACs—carry reputational baggage. Those that remain active, support the company post-close, and bring operating expertise to the table tend to earn more institutional goodwill.

Bottom line: post-SPAC re-ratings aren’t just about revenue. They hinge on governance maturity, capital quality, and credible forward communication. SPACs that grow up quickly can still win serious investor trust.

Lessons for Future SPAC Investors: What the 2021 Class Taught Us About Risk

Now that the hype has cleared and the returns are tallied, what should investors, founders, and sponsors actually take away from the last SPAC cycle? It’s not just a story of excess—it’s a study in execution risk, misaligned incentives, and public-readiness gaps.

For starters, going public early doesn’t accelerate fundamentals. Many SPAC companies were pre-revenue or pre-product, hoping that public capital would fund their growth. But public markets aren’t venture backers. They demand predictability, not promise. Firms like QuantumScape or Joby Aviation traded on future potential but faced major re-ratings as delays mounted.

Second, SPACs amplified timing risk. Merging at peak valuation with minimal revenue cushion left many companies unable to meet their own projections. For example, Arrival, the UK-based EV manufacturer, de-SPACed with fanfare but failed to deliver vehicles at scale. The market punished it swiftly—and permanently.

Third, retail enthusiasm masked structural fragility. SPACs allowed for more retail participation than traditional IPOs, but that also led to frothy valuations and short-lived momentum. Reddit-fueled trades pushed some SPACs up 300% before crashing back down. For institutional allocators, these spikes were noise—not conviction.

Fourth, founder incentives were often misaligned. In many deals, founders took liquidity off the table at the de-SPAC—reducing their skin in the game. Post-close, when stocks dropped, they weren’t necessarily incentivized to turn the ship around. Investors now scrutinize vesting schedules and performance hurdles with far more rigor.

Fifth, the brand of the SPAC sponsor matters more than it used to. In 2020, a sponsor was just a placeholder. By 2023, allocators were creating mental checklists: which SPAC sponsors consistently delivered public-ready companies? Social Capital’s early SPACs rode the wave, but later ones faced heavier scrutiny. Conversely, firms like Altimeter and dMY earned more institutional trust by staying disciplined and picking targets with near-term revenue visibility.

And finally, SPACs aren’t dead—they’re just back in their original lane. In 2024, we’re seeing a new breed of SPACs: focused on smaller, profitable businesses or carveouts from larger firms. No hype, no moonshots—just transactional vehicles to bring niche operators public.

SPACs aren’t a villain in this story. But for them to succeed going forward, investors need to view them not as a shortcut to liquidity—but as a structure requiring discipline, diligence, and durability.

Most SPACs from the 2020–2021 boom didn’t fail because they were SPACs—they failed because they were private companies masquerading as public ones: too early, too fragile, or too poorly governed. What we’re left with now is a new class of public companies that need to earn their stripes the hard way. For investors still scanning this space, the trick isn’t to write off all SPACs—it’s to know what to look for: operating leverage, governance upgrades, capital runway, and credible execution. The ones that pass those tests can still rerate upward. The rest will drift into penny-stock obscurity or quietly seek take-private exits. The SPAC hype cycle may be over, but the real analysis has only just begun—and for those tracking risk-adjusted upside in thinly covered names, that’s where opportunity starts.