Investor Ross Gerber, of Gerber Kawasaki Wealth and Investment Management, is warning retail traders and investors to stay clear of SPACs, or Special Purpose Acquisition Vehicles.
Avoid Them ‘Like The Plague’
On Tuesday, in a post on X, Gerber made a short but direct statement, likely aimed directly at the “SPAC King” himself, Chamath Palihapitiya.
Gerber says, “Avoid SPACs like the plague,” which comes as Palihapitiya returns with a $250 million new SPAC deal, now focusing on sectors such as artificial intelligence, clean energy, and U.S. defense technology, which he describes as being “core to maintaining American leadership.”
The strong dislike that Gerber has expressed for SPACs isn’t surprising and is, in fact, perfectly warranted since most of Palihapitiya’s prior listings are now deep in the red, with one study showing that a $100 investment across each of his SPACs would now be down 73%.
Wall Street Fleecing Individual Investors
Gerber has been critical of SPACs for quite some time, going against them all the way back in 2021, when the SPAC-mania was at its peak. According to Gerber, “SPACs are another Wall Street fleecing of individual investors,” which is why, he says, everyone on Wall Street is doing it.
Referring to Churchill Capital Corp IV ($CCIV), which was the special purpose acquisition company that was merged with Lucid Group Inc. (NASDAQ:LCID), to help take the automaker public, Gerber says, the stock that was trading at $30 at the time, was available for Wall Street banks and hedge funds to buy in at $10.
“It’s called a PIPE,” he says, or Private Investment In Public Equity, through which the big banks and hedge funds “get tons of warrants” in companies that are about to go public. As of now, shares of Lucid Group are down 96.3% since their all-time high of $58.05 in February 2021.
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