Please ensure Javascript is enabled for purposes of website accessibility

Why dMY Technology Group Plunged 14.6% on Monday

By Travis Hoium - Mar 8, 2021 at 3:42PM

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

A merger announcement wasn't what the market wanted to hear today.

What happened 

Shares of dMY Technology Group III (DMYI) plunged as much as 14.6% in trading on Monday after the company announced a merger with IonQ. Shares were still down 14.4% at 3 p.m. EST and showed no signs of recovering today. 

So what

IonQ will merge with the SPAC to form a new public company that will trade under the "IONQ" ticker. Fidelity Management & Research, Silver Lake, Breakthrough Energy Ventures, MSD Partners, Hyundai, Kia, and more have also committed to a PIPE that will add $350 million in cash to the company. A PIPE is a way for the SPAC to raise money in addition to the IPO and often shows investors that institutional investors are willing to invest in the company. 

Illustration of a quantum computing chip.

Image source: Getty Images.

In total, IonQ will have $650 million in cash and an implied value of $2 billion. The transaction has also been approved by both companies' boards of directors. 

Now what

This seems like good news and confirms a rumor that sent dMY Technology Group III's shares sharply higher just a few weeks ago. It looks like today, traders are selling the real news that the merger is going through. Sometimes a merger taking place isn't as exciting as the prospect that it might and investors may be disappointed by the size of the PIPE as well. At the end of the day, today's move won't affect IonQ's prospects as a growth stock and long-term investors can see this as a buying opportunity. 

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

dMY Technology Group, Inc. III Stock Quote
dMY Technology Group, Inc. III
Hyundai Motor Company Stock Quote
Hyundai Motor Company

*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 06/27/2022.

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.