What happened

Shares of Switchback Energy Acquisition (SBE), the special purpose acquisition vehicle that set its sights on taking electric car charging company ChargePoint public five months ago, has done so.  

The deal is done. ChargePoint is merged. And Switchback stock is down 13.5% as of 3 p.m. EST.

Cartoon characters confused by stock chart arrow falling and crashing into floor

Image source: Getty Images.

So what

That decline probably shouldn't surprise investors. After all, when Switchback first announced its target back in September, its stock was trading for just over $10 a share -- less than a third of what it costs today. After tripling in value on the news that it would buy ChargePoint, the fact that it has bought ChargePoint means there's little left in the way of a catalyst to keep lifting Switchback stock higher.

Going forward, Switchback and its ticker, SBE, will disappear, to be replaced by ChargePoint Holdings on the NYSE, trading under ticker symbol CHPT beginning March 1.  

Now what

What can investors learn from this? Two lessons, I think, are paramount.

First, if you were expecting that Switchback consummating its merger with ChargePoint would be cause for celebration, think again. It seems that the process of SPACs announcing and then closing mergers is subject to the law of "buy the rumor, sell the news," and you cannot depend on getting a "pop" on merger day.

And second, it's time to start taking SPAC promises with a few grains of salt. Raise your hand if you remember, back in September, what Switchback said its stock would be worth at the time it merged with ChargePoint. Anyone?

Here: Read the press release for yourself. Switchback told investors it would be worth $3.1 billion at the time the deal closed. More precisely, it predicted an implied $2.4 billion enterprise value. But when you add the $683 million in cash the company would come public with, that equals a predicted market capitalization of $3.1 billion.

And how much is Switchback actually worth today? $1.25 billion.

Granted, the stock is still up three times in five months, and that's not bad for less than half a year's work. But even so, Switchback is still worth barely 40% of what the deal's brokers promised investors back in September. If you're looking to buy into the next hot SPAC IPO, this is a fact worth remembering.