From Fortune's Term Sheet:
2024, the magical SPAC year
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2024 is apparently going to be a wonderful year for companies that are going public via special purpose acquisition companies.
Amid the frenzy of companies that merged with a SPAC in recent months, many are projecting that they will hit a certain financial milestone in 2024.
On Tuesday, German aviation startup Lilium said it expects to generate revenue in 2024 and hit positive EBITDA (earnings before interest, taxes, depreciation, and amortization) the year after. Electric car company Nikola said last year that it expects to reach a positive EBITDA also in 2024. As did self-driving tech company Luminar. And Lucid Motors. And Canoo.
Aerofarm, a vertical farming company that announced plans to go public via merger with Spring Valley Acquisition last week, expects to be near EBITDA positive by the second half of that year, though still in the red on an annualized basis.
Oh, and here’s U.K.-based car-selling marketplace Cazoo pointing to a “clear pathway to significant revenue growth and strong profitability” with that same figure expected to turn northwards in, you guessed it, 2024.
Others are estimating a softer lead into the year: Indoor farming startup AppHarvest projected in its SPAC merger presentation that it would eke out a positive EBITDA of $14 million in 2023 before achieving a more solid 2024. Startups Clover Health and Opendoor project the same to varying degrees (Opendoor says its “adjusted EBITDA will reach $9 million in 2023”).
The ability to make these projections is a big reason why SPAC mergers are so attractive to companies that have yet to post a revenue or profit. Rules around the traditional initial public offering process prohibit companies making forecasts of their business. SPACs, though, operate under less onerous merger rules, which do allow for such estimates to be made years out into the future. Revenue-less startups need to make these projections if they are to sell their shares to investors.
But that also leaves the question: Are some SPACs taking advantage of these looser disclosure requirements?....
....MUCH MORE
Yes indeed. Come December 31, 2023 we will all be wishing each other "Happy SPAC Year!!!"
