2021 was an interesting year in so many ways. One was the rollout of roughly 33 SPAC’s that were tied to celebrities or famous public figures. As a general rule, they were mostly a bomb, as 21 of the 33 posted negative returns, with some being epic failures.
Jay-Z’s was by far the worst-performing of all, as his took a mind-numbing 84% free fall.
Investors may have learned a valuable lesson this year. Celeb-backed SPAC might be shiny and exciting, but tens of millions of social media followers do not equate to a strong investment opportunity.
Only two of the 33 celeb SPACs posted gains of more than 10%. The S&P 500 had a 24% rally on the year in comparison.
Jay-Z’s massive dud was the cannabis-based “The Parent Company.”
Another big loser was Velo3D Inc, backed by Serena Williams, which was down 25%.
Colin Kaepernick headed up other celeb-backed flops and even Bill Gates-backed a company called Evolve Technologies Holdings that is down 51% since it hit the market.
No celebrity is more willing to put his name on a product than Shaquille O’Neal, and his new venture that collaborates with Beach Body was as successful as Shaq was at the free-throw line when he played in the NBA.
Here’s the lesson learned by investors according to Matt Tuttle, the owner of Tuttle Capital Management, a firm that invests in SPACS.
“Celebrities are eye candy, unless there’s really good reasoning to have them on board. At some point these companies need to deliver on a real mission, and it becomes less about the marketing and more about the strategy.”
There was one celeb-backed SPAC that has killed it so far in 2021. The one connected with Donald Trump is up more than 400%.