Speaker 1: You're listening to Bloomberg Business Week with Carol Messer and
Speaker 1: Bloomberg Quick Takes Tim Stinovic on Bloomberg Radio. Katie, I
Speaker 1: got the ipox spack index pulled up here on the
Speaker 1: Bloomberg terminal. It reached a high of thirty three cents
Speaker 1: back in February. Since then, it's down. A lot has
Speaker 1: changed in a little over a year when it comes
Speaker 1: to spacks. Yeah, absolutely, I mean they were the shiny
Speaker 1: toyah right, It's like the pandemic hit and then boom SPACs. Yeah,
Speaker 1: everything exploded. Well, let's talk to Mike Ryan about it.
Speaker 1: Mike's CEO of Bullet Point Network. Mike previously was a
Speaker 1: partner and co head of Global Equities at Goldman Sacks,
Speaker 1: also an investment committee member at the Harvard Endowment. It's
Speaker 1: good to have you with us, Mike. How are you great? Jim,
Speaker 1: thanks for having me. I should know you're also a
Speaker 1: board chair of the Alpha Partners Technology Merger Corporation. We
Speaker 1: want to talk spacks here, Uh is it? I mean,
Speaker 1: we we saw a lot of spacks being pulled and
Speaker 1: we're still right now seeing you know, pretty much each
Speaker 1: and every week a spack that has been announced, come
Speaker 1: out and say no, we're not going to do it,
Speaker 1: or we're gonna return money to shareholders, or we're not
Speaker 1: going to acquire that target company. What's going on with SPACs? Well, Look,
Speaker 1: I think the market overall for growth stocks has been
Speaker 1: very challenging, as you've been talking about here for days
Speaker 1: and weeks, with more than half of the Nasdaq stocks
Speaker 1: down more than from their highs, and all kinds of
Speaker 1: public well known established companies like Netflix and Zoom, also
Speaker 1: other high profile I p o s, Lemonade, cors Era
Speaker 1: all down about from their highs. So it's pretty natural
Speaker 1: that the stack market, which is primarily catered to growth
Speaker 1: companies and emerging early stage growth companies in particular, is
Speaker 1: also down overall. I think it's really a story of
Speaker 1: growth stocks, um you average, I PO down, the average
Speaker 1: back down. Investors don't like losing money, and I think
Speaker 1: we need to uh let the market settle. We need
Speaker 1: to make sure that the companies that come to market
Speaker 1: through this back product or otherwise are the right companies
Speaker 1: at the right prices. So what does due diligence look
Speaker 1: like They're when you're trying to suss out you know
Speaker 1: what are the right companies and what is the right
Speaker 1: price for that company? Yeah, that's a great question, Katie. UM.
Speaker 1: There are a lot of private companies that you probably know.
Speaker 1: There's about eleven and fifty private unicorns, you know, valued
Speaker 1: it more than a billion dollars. Most of them aspire
Speaker 1: to be public, and I think over the next three
Speaker 1: to five years, uh, you'll see many many companies come public.
Speaker 1: When we look at a business right now, we're looking
Speaker 1: for the same old fashioned basic things that have always
Speaker 1: been important to us. We're looking for a great business.
Speaker 1: We're looking for something that has differentiated products, come petitive
Speaker 1: mode around it, and is run by trustworthy and competent management. Ultimately,
Speaker 1: what we think it's all about is growth and profitability.
Speaker 1: I think what happened last year in the broad equity
Speaker 1: market as well as in the I p O market,
Speaker 1: as well as in this back market is um people
Speaker 1: really lost discipline on profitability and a lot of companies
Speaker 1: that had no clear path to profitability uh came into
Speaker 1: the public market. And I think, Uh, that's probably not
Speaker 1: going to happen again soon. I think there are companies
Speaker 1: that are clearly burning capital and investing in their future. UM.
Speaker 1: But they need to have real credible path to profitability
Speaker 1: in order to be well embraced in today's market. And
Speaker 1: so I think what we're looking for our great companies
Speaker 1: run by great management with growth and profitability outlooks that
Speaker 1: we can get behind and that investors will like. And
Speaker 1: then you have to bring it out a price that
Speaker 1: makes sense for the market. What is the advantage of
Speaker 1: doing as back in the environment. Well, again, I think
Speaker 1: the many companies want to be public, and they want
Speaker 1: to be public because they want to have a merger
Speaker 1: currency to do M and A transactions. They want to
Speaker 1: have a stock option currency to attract and retain and
Speaker 1: motivate their team and be able to have a competitive addetace.
Speaker 1: Why not just go public, you know, through a traditional
Speaker 1: I p O or a direct listing. Well, I think
Speaker 1: you'll see a lot of all the above. Um, you know,
Speaker 1: last year there were many I p o s regular
Speaker 1: way i p O s. This year they've only been
Speaker 1: I think forty one, and only about twenty of them
Speaker 1: have been twenty million dollars or more in the regular
Speaker 1: way I p O market. And so with I p
Speaker 1: O s, traditional i p O s essentially down about
Speaker 1: as much as stacts. You know, I think the stack
Speaker 1: market down a p O market on average, down forty
Speaker 1: six month end. They've been a handful of direct listings,
Speaker 1: some of them, you know, the averages, they don't matter
Speaker 1: because it's only a handful of them there down more
Speaker 1: than so you really have a phenomena where growth stocks,
Speaker 1: especially cash burning companies that don't have a clear path
Speaker 1: to profitabilities have sold off. And I think that's happening
Speaker 1: for public stocks that have been outstanding for years, it's
Speaker 1: happening for I p o s, and it's happening for spacts. So, Mike,
Speaker 1: I mean, does your view of the spack market sort
Speaker 1: of have to be predicated on the trajectory for growth
Speaker 1: stocks then well, I think the majority of companies that
Speaker 1: are looking at going public in any format, including in spacts,
Speaker 1: need and want capital as well as that public currency
Speaker 1: that I mentioned earlier. I think growth companies are generally
Speaker 1: the majority of I p o s. And you know,
Speaker 1: technology in particular, I think has had a massive positive
Speaker 1: effect on the world and as a big enormous segment
Speaker 1: now of the stock market. So I think you'll you'll
Speaker 1: imagine that a lot of the I p O s
Speaker 1: will continue to be technology, health care, other segments of growth.
Speaker 1: But you're certainly seeing spacts and non spact transactions in
Speaker 1: you know, materials, industrials. Obviously, energy is a very hot
Speaker 1: sector now in the public markets and elsewhere with oil
Speaker 1: prices as far as they are. So you'll see things
Speaker 1: of all types, but the predominance of ideo activity has
Speaker 1: been in growth companies, and most of the growth companies
Speaker 1: have been in technology and health care. So, Mike, what's
Speaker 1: attractive to you as board chair of the Awful Partners
Speaker 1: Technology Merger Corporation. Well, we're looking for companies that have
Speaker 1: that special characteristic. They have growth, they have paths of profitability,
Speaker 1: they're run by great management. And you know, frankly, we're
Speaker 1: lucky because we have a lot of options out there
Speaker 1: that fit that bill. We also need companies even in
Speaker 1: this even in this environment, there are a lot of options.
Speaker 1: There are. Indeed, um companies have stopped wanting to go
Speaker 1: public and uh and again, I think over the next
Speaker 1: three to five years you'll see a lot of ideas
Speaker 1: and a lot public listings for these companies. I mean,
Speaker 1: one of the great things about the US capital markets
Speaker 1: is with the broadest, deepest pool of money in the
Speaker 1: world and having successful public listings is going to continue.
Speaker 1: You've had so far a year to date. I think
Speaker 1: I just read the worst start to a year since
Speaker 1: nineteen sixty two. So the stocking really under pressure now.
Speaker 1: And so I've seen this before. You know, we saw
Speaker 1: this in you know nineteen the I P. O market
Speaker 1: closed completely for a time. We obviously saw this after
Speaker 1: the dot com uh and so you're just seeing normal
Speaker 1: volatility and you're seeing a decline in volumes. But I
Speaker 1: think for the right companies at the right prices, they'll
Speaker 1: still want to go public and Stack to be part
Speaker 1: of that, all right, Mike Ryan, We're gonna have to
Speaker 1: leave it their CEO of bullet Point Now. We're also
Speaker 1: a board chair at the Alpha Partners Technology Merger Corporation,
Speaker 1: talking Stacks that is going to do it for Bloomberg
Speaker 1: Business Week on behalf of the Katie Greifeld, I'm Tim Stanivik.
Speaker 1: A big thank you from the entire team here at
Speaker 1: Bloomberg Radio. This is Bloomberg