The SPAC Report Card: 85% Failed. Here Is What the Filings Told You.
Between 2020 and 2021, 861 SPACs raised $245 billion from investors. It was supposed to be the democratization of investing - giving retail investors access to the next Tesla, the next Amazon, before they went public. Instead, it became one of the largest wealth transfers from retail to institutional investors in market history. The class of 2021 lost an average of 67% of their value, and 85% of all de-SPACs trade below their $10 IPO price. But every failure was telegraphed in the SEC filings. Here is the report card - and the one SPAC that proves the filings had the answers all along.
The SPAC Scorecard
→The damage: 85% of ~300 completed de-SPACs trade below their $10 IPO price
→The worst vintage: 2021 de-SPACs lost an average of 67%; 2022 lost 59%
→The exception: SoFi used SPAC capital to acquire a bank charter and reached GAAP profitability
→The lesson: Every failure was visible in the S-4 filing if you knew where to look
→SPAC 4.0: New SEC rules fix the worst structural problems, but investor diligence still matters
The Damage Report: SPAC Era by the Numbers
The blank check company boom of 2020-2021 was the largest speculative episode in capital markets since the dot-com bubble. The numbers tell a story of staggering capital destruction:
Average Value Loss (2021 De-SPACs)
-67%
From $10 IPO price; median even worse at -78%
Average Value Loss (2022 De-SPACs)
-59%
Slightly better vintage but still catastrophic
Trading Below $10 IPO Price
85%
Of ~300 SPACs that completed reverse mergers through 2022
Total SPAC IPOs (2020-2021)
861
Raised $245 billion in the blank check boom
SPACs That Liquidated Without Merging
~40%
Hundreds returned cash to investors after failing to find targets
Active SPAC-Focused Firms Remaining
Under 20
Down from 100+ at peak in 2021
Not Even a Bull Market Could Save Them
The S&P 500 gained over 45% from the start of 2023 through early 2026. AI stocks went parabolic. Even meme stocks had multiple revivals. And still, 85% of de-SPACs could not get back to $10. When a rising tide lifts all boats except yours, the problem is not the tide - it is the boat.
Five De-SPACs: From Fraud to Fortune
The best way to understand what went wrong - and what went right - is to examine individual cases. These five de-SPACs span the full spectrum from criminal fraud to rare success. In every case, the SEC filings contained the information investors needed to make better decisions.
Nikola (NKLA)
VectoIQ Acquisition • Merged June 2020
Peak Price
$65.90
Current Price
~$1.50
What the filing showed: S-1 and Super 8-K showed zero revenue, no production vehicles, and founder held voting control. Risk factors warned that hydrogen fueling infrastructure did not exist.
Red flags: CEO convicted of fraud (Oct 2022). The filing disclosed that the company had no manufacturing capability and all revenue projections were aspirational.
Verdict: The filings told you everything. Zero revenue + total dependency on future technology + founder control = maximum risk.
Virgin Galactic (SPCE)
Social Capital Hedosophia • Merged October 2019
Peak Price
$62.80
Current Price
~$3.20
What the filing showed: Pre-merger S-4 disclosed that commercial spaceflight had never been proven at scale, ticket deposits were refundable, and the path to profitability required technology that had not been built.
Red flags: Filing showed massive cash burn with no revenue timeline. The risk section explicitly stated that the company may never achieve commercial operations.
Verdict: Hype-driven valuation. The filings disclosed that commercial operations were years away and financially uncertain.
Lucid (LCID)
Churchill Capital Corp IV • Merged July 2021
Peak Price
$57.75
Current Price
~$2.80
What the filing showed: S-4 proxy disclosed production targets of 20,000+ vehicles in 2022. Actual production was 7,180. Risk factors warned about supply chain challenges and Saudi PIF ownership concentration.
Red flags: 60%+ Saudi sovereign wealth fund ownership created governance concerns. Production projections in the filing were aggressive relative to the company having zero vehicles delivered at merger time.
Verdict: Overpromise in projections. The filing had the production targets that became the yardstick for disappointment.
DraftKings (DKNG)
Diamond Eagle Acquisition • Merged April 2020
Peak Price
$74.38
Current Price
~$38.00
What the filing showed: S-4 disclosed real revenue ($323M pre-merger), growing user base, and clear regulatory tailwinds from state-by-state sports betting legalization.
Mixed signals: Regulatory risk was honestly disclosed but presented alongside a concrete expansion strategy. Path to profitability was long but credible.
Verdict: Middle case. Real business, real revenue, but priced for perfection at peak. Filing showed the revenue was real even if valuation was stretched.
SoFi (SOFI)
Social Capital Hedosophia V • Merged June 2021
Peak Price
$24.65
Current Price
~$16.00
What the filing showed: S-4 disclosed bank charter application (pending), diversified fintech revenue streams (lending, investing, technology platform), and a clear strategy to use charter for cheaper funding costs.
Why it worked: Minimal real red flags in hindsight. Filing showed diversified revenue, growing membership, and a specific strategic catalyst (bank charter) with a defined timeline.
Verdict: The rare SPAC winner. The filing showed a real business with a specific, achievable catalyst. SoFi obtained its bank charter in Jan 2022 and reached GAAP profitability by 2024.
The SoFi Exception: What the Filing Told You That Was Different
SoFi is the most instructive SPAC case study because it proves that the filing contained all the information needed to identify a winner. Everything that made SoFi succeed was disclosed in its S-4 proxy statement before the merger closed. The question is whether investors bothered to read it.
| Factor | SoFi | Typical SPAC | Filing Signal |
|---|---|---|---|
| Real Revenue Pre-Merger | $621M in revenue at time of SPAC merger | Most SPAC targets had zero or minimal revenue | S-4 showed audited financials with diversified revenue streams, not projections |
| Specific Catalyst with Timeline | Bank charter application with expected approval in 6-12 months | Vague promises about future technology or market expansion | Filing disclosed the charter application status and regulatory timeline |
| Accretive Use of SPAC Proceeds | Used capital to fund charter requirements and acquire Technisys ($1.1B) | Most used SPAC cash for operating expenses (slow death of dilution) | Use of proceeds section described specific strategic acquisitions |
| Management Track Record | CEO Anthony Noto (ex-Twitter COO, ex-Goldman CFO) with public company experience | Many SPAC targets had founders with zero public company experience | Management bios in S-4 showed relevant operating and financial experience |
| Path to Profitability | Bank charter would reduce cost of capital, creating clear margin expansion path | Profitability dependent on technology breakthroughs or massive market adoption | MD&A section modeled the financial impact of charter approval |
The Bank Charter Catalyst
The single most important disclosure in SoFi's S-4 filing was the pending bank charter application. A bank charter would allow SoFi to take deposits and lend from its own balance sheet rather than selling loans to third parties. This created a clear, quantifiable path to profitability that did not depend on technology miracles or market expansion.
Timeline: SoFi disclosed the charter application in its S-4 (mid-2021). Obtained the charter in January 2022. Reached GAAP profitability in Q4 2023. That entire trajectory was visible in the filing, for anyone who read it.
The SPAC Red Flag Checklist: What to Look for in the Filing
After analyzing hundreds of SPAC filings, clear patterns emerge. These six red flags appeared in the S-4 proxy statements and Super 8-K filings of nearly every SPAC that subsequently collapsed. If you had checked for these signals, you would have avoided the worst outcomes.
Zero or Minimal Revenue at Merger
CriticalSPAC targets with no revenue are betting entirely on future execution. 92% of zero-revenue de-SPACs from 2021 trade below $5 today.
Where in the filing: Financial statements in the S-4 proxy or Super 8-K. Check if revenue is real or projected.
Aggressive Revenue Projections
CriticalSPAC sponsors use forward-looking projections that public companies cannot. A company projecting 10x revenue growth in 3 years is almost certainly overpromising.
Where in the filing: S-4 proxy statement, specifically the section on financial projections and assumptions.
Founder or Sponsor Promote Structure
HighSPAC sponsors typically receive 20% of post-merger shares for a nominal investment. This dilutes public shareholders by 20% from day one.
Where in the filing: S-1 and S-4: look for founder shares, promote shares, or sponsor economics section.
No Lock-Up or Short Lock-Up Period
HighIf insiders can sell immediately after merger, expect selling pressure. Longer lock-ups (12+ months) signal confidence.
Where in the filing: S-4 proxy: Lock-up agreement section. Also check for early release provisions.
Concentration of Voting Power
Medium-HighDual-class share structures or majority ownership by a single entity means public shareholders have limited governance voice.
Where in the filing: S-4 risk factors and governance section. Check voting rights per share class.
Vague Use of Proceeds
MediumIf the company cannot articulate exactly how it will use SPAC cash beyond general corporate purposes, the capital will likely fund ongoing losses.
Where in the filing: Use of proceeds section in the S-4 proxy or Super 8-K.
SPAC 4.0: Do the New SEC Rules Fix the Problem?
In response to the SPAC crash, the SEC implemented new rules designed to close the gaps that allowed retail investors to lose billions. A new generation of "SPAC 4.0" sponsors claims to have learned from past mistakes. Early 2026 data shows a tentative revival: Willow Lane Acquisition Corp. II ($125M IPO, Feb 2026) and Colombier Acquisition Corp. III ($260M IPO, Feb 2026) have both priced successfully.
Super 8-K Requirement
De-SPACs must file Form 10 equivalent information within 4 business days of closing
Full company disclosure (financials, risk factors, MD&A) available immediately after merger
Previously, detailed disclosure could be delayed for weeks or months after merger
Extended Lock-Up Periods
Longer mandatory lock-ups for founder shares and warrants
Reduced insider selling pressure in the critical first year after merger
Some SPACs had lock-ups as short as 30 days, enabling immediate insider dumping
Projection Liability
Forward-looking projections in SPAC mergers now carry the same liability as IPO projections
Companies can no longer hide behind safe harbor disclaimers for wildly optimistic forecasts
The PSLRA safe harbor allowed SPAC projections with minimal accountability
Underwriter Liability
Banks involved in SPAC IPOs face liability as de facto underwriters of the de-SPAC transaction
Banks now have skin in the game for the quality of the merger target
Banks collected SPAC IPO fees but had no liability for what happened after merger
The Verdict on SPAC 4.0
The new rules address the structural problems: projection liability, sponsor accountability, lock-up requirements, and disclosure timing. But they do not fix the fundamental issue that most SPAC targets are companies that could not go public through a traditional IPO because the numbers would not survive underwriter scrutiny.
Bottom line: Better rules make the game fairer, but they do not make bad businesses good. The filing is still your best tool for separating the SoFis from the Nikolas.
Five Lessons from the SPAC Crash
1. Revenue Is Not Optional
The single strongest predictor of de-SPAC success was having real, audited revenue before the merger. SoFi had $621M. Nikola had $0. The market eventually cares about fundamentals.
Action Item: Before investing in any SPAC or de-SPAC, check the S-4 for audited financial statements. If revenue is zero, the risk is extreme.
2. Projections Are Marketing, Not Forecasts
SPAC projections showed average revenue 5-10x actual results within 2 years. These projections were used to justify valuations but had no legal accountability under the old rules.
Action Item: Discount all SPAC revenue projections by at least 50%. Compare the projected growth rate to the company's actual historical growth rate.
3. The Promote Eats Your Returns
The 20% sponsor promote means your shares are worth 20% less than you think from day one. On a $10 SPAC, the company needs to reach $12.50 just for you to break even after dilution.
Action Item: Calculate the total dilution from promote shares, warrants, and earn-outs. If total dilution exceeds 30%, the deal structure favors insiders over public shareholders.
4. Management Experience Matters More in SPACs
SoFi succeeded partly because its CEO had deep public company experience (Goldman CFO, Twitter COO). Most failed SPACs had founders running a public company for the first time.
Action Item: Check the management bios in the S-4. Public company experience, especially at relevant scale, is a meaningful signal.
5. The Filing Is Your Best Friend
Every SPAC disaster was telegraphed in the filing. Nikola disclosed zero manufacturing capability. Lucid disclosed aggressive production targets. Virgin Galactic disclosed that commercial operations may never happen.
Action Item: Read the S-4 risk factors section completely. If the company itself warns that it may never achieve commercial viability, believe them.
The Bottom Line: The Filings Had the Answers
The SPAC boom was not a failure of information - it was a failure of attention. Every red flag that led to 85% of de-SPACs trading below their IPO price was disclosed in the SEC filings before the mergers closed. Nikola disclosed zero revenue and zero production. Virgin Galactic warned it might never achieve commercial operations. Lucid posted aggressive targets on zero deliveries.
And SoFi? It disclosed real revenue, a specific catalyst with a timeline, experienced management, and a clear path to profitability. The filing was the answer key. The question was whether anyone read it.
Three Takeaways for the SPAC 4.0 Era
85% Failure Is Not Bad Luck - It Is Structure
The SPAC structure inherently favors sponsors over public shareholders through the 20% promote, short lock-ups, and projection liability shields. New SEC rules fix some of this, but the economics still tilt toward insiders.
Revenue Beats Projections, Every Time
The single best predictor of de-SPAC success is audited revenue at the time of merger. SoFi had $621M. Nikola had $0. No amount of projections, celebrity sponsors, or media hype substitutes for actual business results.
Read the S-4 Before You Invest
The S-4 proxy statement is the most important document in any SPAC transaction. It contains the financial statements, management bios, risk factors, projections, and deal structure that determine whether you are investing in a business or funding a sponsor's promote.
Learn to Read SEC Filings Before You Invest
The SPAC crash proved that SEC filings contain the answers - if you know where to look. Our guides teach you how to read 8-K material events, 10-K risk factors, and S-4 proxy statements the way professional investors do.
Disclaimer: This analysis is for educational and informational purposes only. It is not investment advice. The author may or may not hold positions in the securities mentioned. Stock prices cited are approximate as of the publication date. Always do your own research and consult with a qualified financial advisor before making investment decisions.
All data sourced from public SEC filings, FTI Consulting research, Yale Journal on Regulation, CPA Journal, and other published research. SPAC performance statistics based on published academic and industry analyses of de-SPAC outcomes. Analysis and opinions are those of the author. Past performance does not guarantee future results.