Depending on whether you’re a buyer or a seller, when overpriced corporations deflate in a wave, as we’re witnessing right now, that either signals impending hard times or a period of boom.
As consolidation approaches, the record number of initial public offerings (IPOs) and the flurry of acquisitions involving special purpose acquisition companies (SPACs) in 2020 and 2021 are having a negative effect on some of the high-flying stocks from the epidemic era.
Pratik Gandhi, co-founder and COO of the global money movement platform Nium, claimed that the current situation is “night and day” different from that of 2021, saying that “while last year was all about high valuations and dealmaking, this year is all about being vigilant and prudent.”
That acknowledges the Federal Trade Commission (FTC) and the U.S. Justice Department’s Antitrust Division’s investigation into these arrangements, which has been ongoing since January.
Evidence suggests that many industries are becoming less competitive, potentially “imperiling choice and economic gains for consumers, workers, entrepreneurs, and small businesses,” the Federal Trade Commission (FTC) stated in January. This trend is likely to continue or worsen this year due to a spike in mergers, the FTC predicted.
Gandhi observed that everything fell apart “far faster than we had planned.” “There were still some discussions about transactions occurring in January and February, but the shift in attitude just occurred too quickly.
We are at a point where the sellers want a higher valuation based on whatever they had gotten bids for in the past, and the buyers are anticipating that the valuations would go down. I believe there are still discussions taking place.
Gandhi observes the well-known signals of overpriced corporations returning to reality and views this as both a symptom of a market that is underperforming and significant growth potential.
People are already experiencing several layoffs and running out of money, he claimed. For example, it’s totally feasible that a corporation may run out of financial choices and turn to a white knight for assistance.
