Questions about a SPAC mogul’s stock sales
One of the most prominent names in SPACs, Chamath Palihapitiya, faced backlash last week after regulatory filings showed that he had sold his entire personal stake in Virgin Galactic, which he took public through a blank-check fund. (He will stay on as chairman, and will indirectly remain a shareholder through an investment firm that owns a stake in the company.) The news — coming as shares of many SPACs, as well as Virgin Galactic’s, tumbled amid a broader market decline — added to concerns about a blank-check bubble.
Mr. Palihapitiya insists that he’s still right. After describing what he called a “super tough week,” he tweeted: “I re-questioned my goals and concluded my strategic view is still right.” He added that he had sold his Virgin Galactic shares to free up capital to keep investing in companies that address inequality and climate change, themes he said were “a once in a lifetime opportunity.” (He previously told Reuters that he would put the proceeds from the stock sale toward a “large investment” focused on fighting climate change, the details of which “will be made public in the next few months.”)
But the move still raises concerns. Among them: How committed — financially and otherwise — are Mr. Palihapitiya and other SPAC sponsors to the companies they buy with their blank-check funds? And do other investors sufficiently understand the risks associated with these still unproven companies?
Many investors, including some of Mr. Palihapitiya’s 1.2 million Twitter followers, are likely buying shares in the companies he invests in because they believe he is in the project for the long term, and not simply taking advantage of the favorable economics that SPAC sponsors enjoy, regardless of the investment’s success. (We’ve previously reported on how some sponsors are trying to reduce that misalignment.)
His reputation, and those of other SPAC sponsors, are particularly important, given that potential investors are asked to accept lofty projections as part of these deals. Take for example Virgin Galactic: The investor presentation for its 2019 merger with Mr. Palihapitiya’s SPAC forecast that the company would record $31 million in revenue in 2020 and $210 million this year. But Virgin Galactic executives conceded last month the company did “not generate significant revenue” last year.
In other SPAC news: The Bitcoin mining company Cipher and the crowd-safety tech provider Evolv agreed to go public by merging with blank-check funds, while the self-driving trucking start-up Plus is reportedly in talks to combine with one.
HERE’S WHAT’S HAPPENING
Gov. Andrew Cuomo of New York on calls to resign: “No way.” Mr. Cuomo defied a call from the leader of the New York State Senate to step down, after two more women accused him of inappropriate behavior. The once-popular governor is facing a shrinking circle of advisers and sagging poll numbers, as more New Yorkers say they don’t want him to run again.
cleared the upper chamber, 50-49, after Democrats trimmed unemployment benefits to assuage Senator Joe Manchin. The bill must now pass the House a second time, which is expected, before Mr. Biden signs it into law.
Oil soars after an attack on a Saudi Aramco facility. Crude oil shot above $70 a barrel for the first time in more than a year, after a drone strike took aim at a petroleum storage tank in a major Saudi Arabian port.
Wall Street banks are sitting on big paper profits from winter storms. The trading desks at firms like Goldman Sachs, Morgan Stanley and Bank of America benefited from trades involving power and natural gas following last month’s deep freeze, which sent electricity prices soaring. But bankruptcy filings by power companies and customer bill forgiveness by state lawmakers may crimp those returns.
MacKenzie Scott remarries. The billionaire philanthropist announced that she has married Dan Jewett, a teacher at a prestigious Seattle private school, over a year after she divorced Jeff Bezos. Mr. Jewett has pledged to help Ms. Scott in her philanthropic giving, which has been notable for its speed and scale.
push through measures that critics say will restrict Black citizens’ voting rights, opponents of the measures are calling on the big companies based in the state to step up their defenses of civil liberties. One of those bills has already passed the House, while another could go to a vote in the State Senate as soon as this week.
Companies have played a role in Georgia civil rights battles before. To bolster its reputation as a national hub for business, the state’s capital, Atlanta, positioned itself as the premier city of the “New South.” Leaders like the former mayor Andrew Young, a civil rights activist and an aide to the Rev. Martin Luther King Jr., appealed to moderate business figures, in part by offering incentives and improving infrastructure as a way to attract companies.
Here’s what corporate giants told DealBook about the proposed voting restrictions:
Coke described voting as “a foundational right” and said it supports efforts by the Metro Atlanta Chamber and the Georgia Chamber of Commerce to “help facilitate a balanced approach to the elections bills.”
Home Depot said that “elections should be accessible, fair and secure and support broad voter participation.” It referred to an internal get-out-the-vote initiative and a donation of 9,200 plexiglass dividers across the state to bolster poll station safety.
UPS said it “believes in the importance of the democratic process and supports facilitating the ability of all eligible voters to exercise their civic duty.” It added that it is working with the Atlanta and Georgia chambers of commerce “to ensure equitable access to the polls and the integrity of the election process across the state.”
Delta called voting “a vital part” of the company’s values. “Ensuring an election system that promotes broad voter participation, equal access to the polls, and fair, secure elections processes are critical to voter confidence and creates an environment that ensures everyone’s vote is counted.”
Inspire Brands, the owner of Dunkin’ Donuts and Arby’s and the second-biggest restaurant company in America, did not have a comment.
These statements aren’t enough, activists say. “Just simply saying we support elections — free, fair and accessible elections — without actually addressing the issues currently underway has no teeth,” the Rev. James Woodall, the president of the Georgia N.A.A.C.P., told DealBook.
Mr. Woodall asserted that it is harder now for Georgia-based companies to both tout moderate social policies and cater to local politicians pushing the voting restrictions bills. “Georgia celebrates being the best state to do business,” he said “But that will change if people feel that businesses don’t support them or their lives are literally at stake.”