Special Purpose Acquisition Companies : An Analysis on Stock Prices of Special Purpose Acquisition Companies, and factors contributing to price variations during its lifetime

Abstract: In recent years the number of Special Purpose Acquisition Companies that have entered financialmarkets has increased tremendously, especially in the United States. An important query to this ishow they are valued and priced on stock exchanges. Using multiple regression analysis, the thesisexamines how different factors in a Special Purpose Acquisition Company relates to the stock price atdifferent phases of the companies lifetime. Further, it analyzes if these factors can help determining thestock price of similar companies in the future by proposing a model. Our result presents two modelswhich describes the stock price at target announced date and merger complete date respectively. Thetarget announced model is dependent of the initial term of the company, how many days until a targetcompany is specified and also if the company is specified to acquire in tech, energy or healthcare.However, the presented model for the target announced stock price shows weak accuracy and shouldin our proposition not be used in practice — and if at all — with great caution. The merger completemodel that is presented shows that the merger complete stock price is highly dependent on the targetannounced stock price, and although this model is somewhat more accurate, its practical purposes isalso limited due to inaccuracy. In conclusion, despite some relationship between the stock price andexamined factors being detected, our models are not appropriate to be used for practical purposes.Although, the target announced stock price can be used as a indicator of in which direction the mergercomplete stock price is heading.