Please ensure Javascript is enabled for purposes of website accessibility

SPAC Mania: Here's Why Opendoor's Acquirer Is Soaring on Friday

By Matthew Frankel, CFP® – Oct 9, 2020 at 1:27PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The blank check company known as Social Capital Hedosophia Holdings II is spiking higher.

What happened

The stock market was having a strong day on Friday, but not compared with Social Capital Hedosophia Holdings II's (IPOB). Best known for being the special purpose acquisition company, or SPAC, that plans to take real estate tech company Opendoor public, it was up by 15% as of 12:30 p.m. EDT.

So what

There isn't any company-specific news out today that is propelling the SPAC higher. However, there is a ton of activity elsewhere in the SPAC world that could be creating investor interest.

Young couple in living room with house keys in hand

Image source: Getty Images.

Specifically, venture capital investor Chamath Palihapitiya is launching three more of these so-called blank check companies, all of which just had successful IPOs.

  • Social Capital Hedosophia Holdings IV raised $400 million in its IPO.
  • Social Capital Hedosophia Holdings V raised $700 million in its IPO.
  • Social Capital Hedosophia Holdings VI raised $1 billion in its IPO.

Why do investors care so much? Well, recall that Palihapitiya's first SPAC was the company that took Richard Branson's Virgin Galactic public last year. Palihapitiya's second SPAC is the Opendoor go-public vehicle, and the third -- called Social Capital Hedosophia Holdings III -- plans to take Clover Health public early next year.

Now what

Real estate tech is already a high-interest business right now. Just look at the recent returns of Zillow or Redfin, and you'll see what I'm talking about. This hot growth industry in the midst of SPAC-Mania 2020 seems to be fueling today's big gains.

Matthew Frankel, CFP has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Redfin, Virgin Galactic Holdings Inc, Zillow Group (A shares), and Zillow Group (C shares). The Motley Fool owns shares of Social Capital Hedosophia Holdings II and recommends the following options: short November 2020 $35 puts on Redfin. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Social Capital Hedosophia Holdings II Stock Quote
Social Capital Hedosophia Holdings II

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 11/29/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.