The practice and theory of DAT SPACs

Key Points

1. SPACs allow investors to redeem their money if they don't like the acquired company, theoretically offering retail investors access to IPO-like opportunities at $10 per share.

2. In practice, SPACs have delivered poor returns, with a median return of minus 65% post-merger, as seen in past SPAC booms involving dubious ventures.

3. SPAC sponsors and institutional investors often profit significantly (e.g., 113% annualized returns for sponsors), while retail investors earn modest returns (9.3% average).

4. DAT SPACs (Digital Asset Trust SPACs) trading around $11 per share imply minimal premium to NAV, contradicting the expectation that crypto-backed SPACs would trade at higher valuations.

5. Some digital asset companies (e.g., VAPE, SBET, TRON) have seen 5-10x gains post-SPAC merger, but most high-profile DAT SPACs remain flat (~10% returns), reflecting investor skepticism.