Tigo Energy (NASDAQ: TYGO) is up 83% in regular trading on Thursday, back down 7% in the postmarket. This is the excitement on the completion of the SPAC deal that IPOs Tigo onto the public markets. Of course, it's possible to short any stock at any time but at the moment of an IPO it can be difficult. For where is the borrow to come from? SPACs make this easier as of course there is extant stock on the market that can be traded.
Now, we near never do think that retail traders should be involved in short selling. The risks on the down side are unlimited, with the profits capped by the starting price of the stock itself. That just doesn't seem like a sensible distribution of risk unless the deal is as a part of a more complex hedge etc. But the point we want to make here is that shorting a recent SPAC is indeed possible and not all that difficult. What this then means is that while we can have bursts of enthusiasm on the bull side in such new issues they do quickly become subject to the pressures of the bears - through that potential for short selling. The effect of this is that IPO pops in SPACs can be shorter lived than those in regular IPO stocks. Simply because it's easier for people to get the contrarian speculation in place and thus influencing prices.
Tigo Energy stock price from NASDAQ
As to what Tigo does: “a provider of hardware and software solutions aimed at enhancing the safety, yield and efficiency of residential, commercial and utility-scale solar energy systems.” which all seems very reasonable. It's certainly a growing market.
The SPAC merger valued Tigo at some $600 million, wich can be thought of as rich. However, the immediate determinant, these days, of a SPAC immediately post merger is a look at the number of holders who withdrew their cash. This has happened to a number of companies - Buzzfeed is the one with resonance for us - where those who had financed the SPAC at that $10 a share decided that they didn't like the merger at all and so took their $10 out and home again. A low rate of this happening does mean a pop these days. Simply because that withdrawal of capital is the last hurdle that the whole process has to leap.
We would expect Tigo Energy to continue volatile but we would suggest that the initial enthusiasm may well fade. It's already started, postmarket, who knows how far that will go?
