The stock market was generally higher on Tuesday as investors were hopeful for the possibility of further stimulus after the Biden administration moves into the White House. But one special purpose acquisition company, or SPAC, was performing especially well.
Social Capital Hedosophia Holdings V (IPOE) was soaring. As of 1:20 p.m. EST, the Chamath Palihapitiya-led SPAC was higher by about 14% after rising by more than 20% earlier in the day.
There doesn't appear to be any specific news propelling the stock higher. About two weeks ago, we learned that the $800 million SPAC had entered into an agreement to take fintech start-up SoFi public at a valuation of $8.65 billion.
One potential catalyst for today's news is the expectation for further stimulus under the incoming Biden administration, which could certainly help a diversified financial technology company like SoFi. For example, after the CARES Act was passed in March, savings rates soared in the United States, which could help SoFi's high-yield payment platform. And with the general expectation of declining unemployment and rising consumer confidence, demand for loans could rise sharply, which is SoFi's bread and butter.
One important takeaway is that the news SoFi is going public is still pretty fresh in investors' minds, and we don't know too much about the business' specific financial results just yet. As such, it's reasonable to expect volatile moves like this in the near term as investors struggle to value the soon-to-be-public fintech.