Most VC-backed startups that went public via a SPAC in 2021 have seen their stock drop; Metromile, View, Owlet, and Clover Health are among the worst performers
Joanna Glasner / Crunchbase News : Tweets: @carnage4life , @bigblackjacobin , and @martinsfp Tweets: Dare Obasanjo / @carnage4life : SPACs were clearly bad investments (companies going public but avoiding rigor & transparency of IPO process) but people who got in early made bank by pushing FOMO on Twitter. *cough* Chamath *cough* Many web3 tokens will see a similar bloodbath next year. https://news.crunchbase.com/ ... Edward Ongweso Jr / @bigblackjacobin : huge part of me is very surprised financiers still throw money at an investment vehicle which has an even lower hit rate than VCs, but then again the structure of SPACs is mindnumbingly profitable for everyone but the actual firm going public https://www.wsj.com/... Martin Sfp Bryant / @martinsfp : Not so SPACtacular. https://twitter.com/...
Context & Ripple Effects
The warning signs were visible well before year-end: a May study found 44 tech startups that had completed SPAC deals were already down an average of 12.6% by mid-May, and the vehicle's core selling point was always looser disclosure — because a de-SPAC is structured as a merger rather than an offering, issuers face fewer restrictions on promoting their stock than in a traditional IPO's quiet period.
What changed by late December is that the decline broadened from a handful of names to most of the VC-backed 2021 class, with Metromile, View, Owlet, and Clover Health as the worst performers — confirming that the weakness was structural, not idiosyncratic.
First-order effects
- Retail investors who bought at or near the de-SPAC close are sitting on steep losses in names like Metromile and Owlet, while sponsors and early insiders who entered pre-merger at roughly $10 per share were cushioned regardless of where public holders ended up.
- Companies like View and Clover Health that priced off frothy forward projections now trade far below the valuations their PIPE investors underwrote, making any new equity raise dilutive or impossible.
Second-order effects
- Because SPACs could legally promote their stock during the deal process while traditional IPOs sat in quiet periods, the marketing channel mattered more than usual — figures like Chamath Palihapitiya drove FOMO-driven retail buying on Twitter, concentrating losses among late retail entrants while early promoters exited profitably.
- Underperforming de-SPACs cut off the exit path for the next cohort of venture-backed startups, pushing VCs and founders back toward traditional IPOs and delaying liquidity for funds holding 2019–2021 vintages.
Third-order effects
- The pattern culminates in the market simply closing: Dealogic recorded July 2022 as the first month in five years with no new SPAC IPOs after the March 2021 peak of over $36B raised, and subsequent analysis counted at least eight de-SPAC bankruptcies with nearly 100 companies burning unsustainably and 73 trading below $1.
- If regulators connect the dots between the merger-loophole promotion rules and the retail losses, expect pressure to impose IPO-like disclosure and quiet-period constraints on de-SPACs — collapsing the vehicle's main advantage over a conventional listing.
The trend: The 2021 SPAC wave is completing a full boom-and-bust arc — promotional listing structure, retail FOMO, broad share collapse, then pipeline shutdown — pushing startup exits back toward traditional IPOs with stricter disclosure.