Is Powerup Acquisition Corp. IPO Stock A Good Buy?

While the COVID-19 pandemic disrupted the global economy and catalyzed myriad political changes, not everyone suffered the same magnitude of consequences. Indeed, some companies, such as PowerUp Acquisition Corp., could end up benefiting from…

what other entities would consider a catastrophic event.

Thanks to its focus on video games and the emerging metaverse movement, PowerUp could corral bullish interest because of behavioral changes in the new normal. However, prospective investors must also be aware of huge competitive concerns that could derail its upcoming market debut.

What Does PowerUp Acquisition Do?

As a special purpose acquisition company (SPAC), PowerUp Acquisition does not feature any underlying operations. Instead, its main purpose is to initiate an initial public offering (IPO) — the process involved in taking a private enterprise to the capital market — to financially support a bid to merge with a privately held company. Therefore, many journalists and analysts refer to a SPAC-based IPO as a reverse merger: essentially, it’s a backdoor approach to going public.

Based on the information that the SPAC sponsors provided, PowerUp will attempt to identify and combine with an enterprise “within the interactive media, digital media, sports, entertainment, and/or leisure, with a particular focus on video gaming, gaming adjacent and new metaverse video gaming businesses.” Because of the relevance of video games and the metaverse, PowerUp enjoys much more attention than a typical blank-check firm.

However, investors must be aware that a SPAC is not obligated to merge with an entity among its targeted industries unless specifically written as such. Since PowerUp can theoretically merge with any company in any industry (within certain limitations), interested participants for this IPO should exercise careful money management principles.

When is the PowerUp Acquisition IPO Date?

An intriguing concept tied to high-profile sectors, PowerUp Acquisition is scheduled to make its debut on the IPO calendar on Feb. 18, 2022. Shares will list on the Nasdaq exchange under the ticker symbol PWUPU.

Initially, PowerUp filed its intention to go public with the U.S.Securities and Exchange Commission (SEC) confidentially on March 16, 2021. Later, on Dec. 30, the company filed its Form S-1, otherwise known as an IPO investment prospectus. Under the terms of the deal at the time, management disclosed its target to raise $225 million through the distribution of 22.5 million units at $10 each.

At the above proposed deal size, PowerUp would have commanded a market value of $282 million. However, on Valentine’s Day, the SPAC raised the deal size to $250 million. Now, the offering involves 25 million units distributed at the same per-share price. Each unit consists of one share of common stock and one-half of a warrant, exercisable at $11.50 — unchanged from the original S-1 document.

Further, the “initial trust will now be overfunded at $10.25 per unit, up from $10.15 in the previous filing. At the revised deal size, PowerUp Acquisition will raise 11% more in proceeds than previously anticipated.” Citigroup Inc. (NYSE: C) represents the sole bookrunner for this IPO.

The timing of the PowerUp offering couldn’t have arrived at a more perplexing juncture. On one hand, the otherwise terrible pandemic represented a fortuitously perfect upside catalyst for the video gaming industry. Per the World Economic Forum, “COVID-19 saw video games explode in popularity, as consumers were forced to stay at home and keep themselves entertained.”

Better yet, the surge in demand wasn’t just…

 

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