Public speaking sometimes doesn’t work well. This was very true for firms that entered public markets via SPACs at the height of the last boom.
Valuations of dozens of firms once valued in the billions have plummeted, with stock prices plummeting to a penny. In response, an increasing variety of firms are selecting to exit public markets and try their luck again as private firms.
A few weeks ago, a genetic testing provider 23 and Me has grow to be the latest candidate to do this route. Business announced that its CEO and founder, Anne Wojcicki, is considering purchasing all the issued shares that it does not currently own. Her proposal follows more than three years of mostly disastrous results Nasdaqwhose shares were recently valued at around 50 cents each.
23andMe is not alone. In recent months, we have seen a variety of struggling SPACs also announce plans to go private. Honors include:
- Viewmanufacturer of intelligent glass for exclusive buildings, announced last month entered into an agreement with investors to go private and pursue a Chapter 11 bankruptcy reorganization. Before going public in early 2021, Milpitas, California-based View raised more than $1.8 billion in financing enterprise type. As a public company, it struggled at the starting, with a history of losses and constant doubts about its solvency.
- Management Astra, a provider of low-cost small satellite launch services, voted in March to go private after a difficult three years as a public company. The plan is to sell it to a parent company created by Astra’s CEO Chris KempChief Technology Officer Adam London and other long-term investors. After debuting on the Nasdaq in 2021 at a valuation of $2.1 billion, the Alameda, California-based company recently achieved a market capitalization of around $15 million.
- Gray Berkshire, a developer of robotics technology for warehouses, debuted via a SPAC merger in July 2021. Just 20 months later, after losing several billion of its peak valuation, the Bedford, Massachusetts-based company announced it might go private again. The plan was to hire an existing shareholder SoftBank acquisition of all remaining outstanding shares in a transaction valued at roughly $375 million.
- Green light biological sciences, a biotech developing RNA products for health and agriculture, went public in early 2022 at the end of the SPAC boom at an initial valuation of about $1.2 billion. It didn’t go well. Just over a yr later, in May 2023, Medford, Massachusetts-based Greenlight announced that it might Go private through a group of investors led by an existing shareholder The capital of the fall line in a deal that valued the company at $45.5 million.
None of them are case studies of successful post-IPO performance. The initiative’s founders and early supporters undoubtedly hoped to generate more sustained enthusiasm in the public markets.
However, considering the options available, when shares fall below $1, going private definitely is not the worst. It helps that in most of the cases mentioned above, the owners of the newly private company are the founders or long-term shareholders with a deep understanding of the business.
Additionally, while no one likes to see valuations crash, at least a case will be made that there is significant upside potential at current levels.