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R/ChamathPalihapitiya: Chamath Palihapitiya, CEO of Social Capital. Press J to jump to the feed. Press question mark to learn the rest of the keyboard shortcuts. Chamath Palihapitiya just stoked a SPAC fire through his Twitter account. Here's what to know. By Sarah Smith, InvestorPlace Web Content Producer Feb 22, 2021, 3:02 pm EDT February 22, 2021. We would like to show you a description here but the site won’t allow us.

CNBC's Jim Cramer has been bashing SPACs on Twitter and his show this week. That drew attention from the so-called SPAC King Chamath Palihapitiya.

What Happened: Cramer recently highlighted Spartan Energy Acquisition (NYSE: SPAQ), a SPAC merging with Fisker. Cramer compared Henrik Fisker and his company to Nikola (NYSE: NKLA) and Trevor Milton, the Nikola founder who resigned.

On Wednesday, Cramer told his 1.4 million Twitter followers “I am sick of SPACs!.” A simple response came from Palihapitiya:

Why?

— Chamath Palihapitiya (@chamath) October 1, 2020

Cramer’s Thoughts On SPACs: Cramer tweeted to “Squawk Box” host Andrew Ross Sorkin, “Why do investors think that every SPAC is a winner.” Cramer got the following response from Sorkin:

I don’t understand it. But here is one thought: For many investors in a SPAC, pre-merger, it is simply an arbitrage, financial engineering play: they borrow money to invest and capture the spread when a deal gets announced.

— Andrew Ross Sorkin (@andrewrsorkin) October 1, 2020

Cramer went on to say that SPACs make his job hard “because I have to learn each one and there are so many of them.” He said there is “massive homework” needed on SPACs.

Cramer took the SPAC market further by comparing the risks of SPACs to the 2000 dot-com bubble:

It's really amusing that, like in 2000, i tried so hard for people to see the risks because i wanted them to stay in the market but in more staid conservative ways. Here i am again, recommending some specs but also some solid American companies and there's no place for that here

— Jim Cramer (@jimcramer) October 1, 2020

He later admitted the SPAC market is difficult to learn:

Last word on SPAC's; i am actually honest enough to admit that it is difficult to learn all of these. I hate SPACs like i hate doing homework. I do it but it's hard and it's difficult to know what a person is going to do with the money. But there is no mercy for honesty

— Jim Cramer (@jimcramer) October 1, 2020

Chamath Chimes In: Palihapitiya noticed the question Cramer posed to Sorkin and shared his thoughts:

I’d offer this:

1) It’s not so easy: not all deal announcements go well - several of these right now.

2) Sponsors decide initial spac allocations. I personally decide every allocation.

It’s important to construct initial owners who are skilled, long term investors. Arbs suck.

— Chamath Palihapitiya (@chamath) October 1, 2020

Palihapitiya recently shared his thoughts at the Benzinga Boot Camp offering up the bull and bear case.

“It unlocks access to growth companies to a broad cohort of people that were otherwise shut out,” Palihapitiya said.

He cautioned that the SPAC process is hard and investors need to believe in the management team. He cited his “skin in the game” of personally investing in the deals his company completes. Palihapitiya said investors are betting on the decision making and access that the management team has.

What’s Next: Cramer is teasing that SPAC people will love his “Mad Money” show Thursday night. We will see if that means discussion on SPACs or a special guest to discuss the sector. Maybe Palihapitiya is ready to set the record straight.

Palihapitiya’s Social Capital Hedosophia II (NYSE: IPOB) is set to merge with Opendoor. Social Capital Hedosophia III (NYSE: IPOC) is actively searching for a target company. Palihapitiya’s next three SPACS IPOD, IPOE and IPOF are getting close to debuting.

Photo courtesy of Tulane University.

GameStop Corp. shares surged higher Tuesday, following several volatility halts on the New York Stock Exchange, after billionaire investor Chamath Palihapitiya joined the fray in chasing Wall Street's hottest stock.

Palihapitiya, the CEO of Social Capital and part-owner of the Golden Sate Warriors basketball franchise, said he had purchased call options that would allow him to purchase GameStop at $115 a share in February, just as shares in the world's biggest video game retailer were changing hands at $93.70 per share.

A call option gives the buyer the right, but not the obligation, to purchase an asset at a certain price at a specified point in time.

https://twitter.com/chamath/status/1354089928313823232

The stock has been on one of the wildest rides in Wall Street memory over the past two weeks, rising to as high as $159 per share Monday amid a massive surge in retail investor volume and the capitulation of a high-profile short-seller, Citron Research, late last week.

Short sellers, in fact, have lost as much as $5.05 billion betting against GamesStop shares so far this year, according to S3 Partners, including nearly $900 million during this morning's session.

Cnbc Interview With Chamath Palihapitiya

GameStop shares closed 92.7% higher on the session at $147.98 each on the NYSE, pegging the group's market value at just over $10.3 billion. The shares were marked 46.6% higher in after-hours trading, indicating a Wednesday opening bell price of $217.00 each.

https://twitter.com/jimcramer/status/1354024980992897024

GameStop shares have rocketed more than 400% since January 12, when the group reached an agreement with one of its key investors, Ryan Cohen of RC Ventures LLC and the founder of Chewy Inc , to re-structure its board and focus on digital sales and not simply 'remain a videogame retailer that overprioritizes its brick-and-mortar footprint and stumbles around the online ecosystem.'

Powering the surge was an army of retail investors, many of which appeared to co-ordinate their moves in various on-line chat rooms in an effort to 'squeeze' the short-selling Citron Research, which bet against GameStop shares on January 19.

Chamath Twitter Clov

The shares touched an all-time high of $159.18 during a wild Monday session that gave the world's biggest video game retailer a market value of $10.5 billion.

Chamath Palihapitiya Portfolio

This article was originally published by TheStreet.