spac charts are exercises in the limits of hype

The Questionable Optimism of SPAC Investor Decks

After reviewing a significant number of SPAC investor presentations over the past year, a certain pattern began to emerge that caused some concern. Despite a generally conservative outlook, the level of bullish projections presented often felt excessive.

Traditional IPO S-1 filings, in contrast, offer a more grounded approach. When it comes to financial figures, these documents tend to be remarkably straightforward. They generally refrain from including forecasts extending beyond the immediate year, and certainly not for a five-year period. While companies will naturally present their business model and strategies, S-1 filings maintain a reasonable degree of honesty.

Exaggerated Growth Projections

SPAC investor decks frequently diverge from this standard. Consider the following chart:

Past revenue figures seem almost irrelevant when confronted with such ambitious growth forecasts. A projected CAGR of 201% is presented, raising questions about its feasibility.

Further Examples of Optimistic Projections

Another illustrative example can be found here:

The presentation from Local Bounti provides another example:

A Lack of Historical Data

Pear Therapeutics also presented projections without sufficient supporting data:

Similarly, the recent Embark deal lacked clarity regarding past performance and near-term expectations:

Given the questionable accuracy of SPAC predictions, a healthy dose of skepticism is warranted.