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Why Spire Global Stock Just Crashed 45.5%

By Rich Smith – Oct 1, 2021 at 11:36AM

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The SPAC stock just filed a prospectus to sell 80 million shares.

What happened

For the second time in about a week -- and probably for the same reason as last time -- shares of former SPAC stock and current space stock Spire Global (SPIR -1.63%) are crashing to Earth, falling 45.5% through 10:55 a.m. EDT.

And it's all because Spire is selling some shares.

Big red arrow going down over a stock chart

Image source: Getty Images.

So what

Admittedly, a lot of shares.

The last time Spire suffered a sell-off of this magnitude, on Sept. 23, the company had just filed an S-1 form with the SEC registering for sale the following:

  • 5 million shares issued as part of a PIPE investment that was part of its IPO;
  • 3 million shares issued to parties to its investor rights agreement;
  • 1 million shares that might become issuable as part of a contingent earnout right; and
  • 1 million shares that might be issued upon the exercise of warrants.

So 80 million shares total.  

Last night, the company filed its prospectus for the sale of these very same shares with the SEC. In short, the news that cost Spire nearly half its market capitalization this morning appears to be the exact same news that cost the stock about 20% of its market cap a week ago.  

Now what

Now, you can look at this in either of two ways: Either investors didn't react harshly enough to the S-1 filing a week ago (in which case today's sell-off is justified), or they're overreacting to the filing of the prospectus today (in which case it isn't).

Personally, I'm inclined to the latter view. Now, be aware that I'm probably biased on this because I own Spire stock myself. Still, the fact that Spire has reiterated in its prospectus that "the selling securityholders may sell any, all or none of the securities and we do not know when or in what amount the selling securityholders may sell their securities hereunder following the effective date of this registration statement" tells me that while Spire is laying the groundwork for future sales of its stock by the folks involved in bringing it public, neither the S-1 nor the prospectus means that such sales are imminent.

And if you thought Spire's satellite business looked attractive yesterday, it means that today's sell-off in Spire stock is a buying opportunity.

Rich Smith owns shares of Spire Global, Inc. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Stocks Mentioned

Spire Global, Inc. Stock Quote
Spire Global, Inc.
SPIR
$1.21 (-1.63%) $0.02

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