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Since the dawn of civilization, humankind has always dreamed of flying. Finally, on Dec. 17, 1903, Wilbur and Orville Wright accomplished what was long considered impossible, achieving four brief flights with their first powered aircraft. Soon thereafter, the U.S. military received its first airplane and another defensive objective ensued: preventing others from taking off.
Per usual, innovation refused to accept arbitrary borders, necessitating a novel innovation, dogfighting. The deadly art of eliminating aerial combatants, dogfighting unexpectedly yielded one of the core tenets of investing: you don’t target what is but what will be. That’s why modern fighter jets’ gun sights feature constantly shifting non-linear lines, which estimate where cannon fire will strike based on the underlying plane’s trajectory.
Fortunately, most retail investors are not at risk of going down in flames in the literal sense. Nevertheless, by applying dogfighting principles to your investing strategies, you can gain a leg up on the competition. Here, the upcoming initial public offering (IPO) of 8i Acquisition 2 Corp. may provide prospective buyers with much-needed diversification.
Focused on the Asian economy, 8i Acquisition provides retail investors with a distinct opportunity to shift capital toward the eastern hemisphere that’s increasingly becoming more dynamic and financially viable.
When Is the 8i Acquisition 2 Corp. IPO Date?
Earlier this year on May 25, 8i Acquisition 2 filed its intention to launch an IPO with the U.S. Securities and Exchange Commission (SEC). At the time, management disclosed an intention to raise up to $50 million in the deal.
More recently on Nov. 9, 8i Acquisition 2 raised the proposed deal size, aiming for a $75 million raise through the sale of 7.5 million shares at a $10 initial offering price. Each unit will consist of “one share of common stock, one right to receive one-tenth of a share upon the completion of an initial business combination, and one warrant to purchase one-half of a share, exercisable at $11.50.”
At time of writing, 8i shares will price on Nov. 22 and make its debut on the IPO calendar on Nov. 23. Shares will trade on the Nasdaq exchange under the ticker symbol LAXXU. Maxim Group LLC represents the sole bookrunner for the IPO.
Before entertaining a decision on LAXXU stock, investors should note that 8i Acquisition 2 is a special purpose acquisition company (SPAC). As such, 8i doesn’t have any underlying operations. Instead, its main objective is to find a viable enterprise to initiate a business combination via a reverse merger. Hence, many journalists describe SPACs as blank-check firms or shell companies.
In this case, 8i Acquisition 2 represents the second SPAC which 8i Capital, a Singapore-based investment firm backs. Per the blank-check firm’s prospectus, management primarily seeks a business combination in Asia, citing both strong growth in the region as well as executive experience in the region.
Although the target sector provides a compelling backdrop, it’s important to realize that SPACs are not tied to their stated merger intentions. Therefore, 8i Acquisition could just as easily cement a deal outside the declared focus zone. Among other concerns, such a pivot would render research for pre-merger research for LAXXU stock null and void.
Also, prior SPACs have not always delivered on their potential. On a year-to-date basis, SPAC-based IPOs have underperformed benchmark indices, necessitating a cautious approach for anyone interested in buying LAXXU stock.
Lastly, the truncated week beginning Nov. 22 features minimal IPO activity relative to prior weeks. This could work in 8i’s favor because fewer names are competing for attention. At the same time, investors may shut down early for the Thanksgiving holiday, presenting unknowns regarding future trajectory.
8i Acquisition 2 Financial History
At time of writing, 8i Acquisition 2 technically resides in pre-IPO status. In combination with LAXXU being a SPAC, not much financial information is available for interested buyers to analyze. However, the shell company’s prospectus provides some clues as to what management prioritizes.
First, 8i seeks companies featuring an enterprise value between $100 million and $500 million. Preferably, the target firm will already be cash generative.
Second, 8i Capital, under the leadership of CEO James Tan and CFA William Yap, have experience bringing private enterprises to the public arena via reverse mergers, specifically the digital-asset services firm Diginex Ltd. (NASDAQ: EQOS). Therefore, this present endeavor will not be the SPAC sponsors first rodeo.
Third, while 8i Acquisition is not confined to the Asian market, it will probably focus its efforts there as the executives and influential figures on the SPAC’s board command substantial regional expertise. Therefore, moving to another focus area will negative the shell company’s critical advantage.
Beyond that, many experts consider the eastern hemisphere to be the future of the global economy. According to the Asian Development Bank (ADB), “Asia is in the middle of a historic transformation. If it continues to follow its recent trajectory, by 2050 its per capita income could rise sixfold in purchasing power parity (PPP) terms to reach Europe’s levels today. It would make some 3 billion additional Asians affluent by current standards.”
Further, the ADB states that by “nearly doubling its share of global gross domestic product (GDP) to 52 percent by 2050, Asia would regain the dominant economic position it held some 300 years ago, before the industrial revolution.”
It’s not just in theory that the eastern market enjoys economic viability. For instance, a Reuters report noted that Southeast Asia’s internet economy hit $105 billion in 2020, with the COVID-19 pandemic pushing commerce to online platforms.
Additionally, the booming internet engagement speaks to growing integration of technological infrastructures. Per an industry report that covers Indonesia, Malaysia, Vietnam, Singapore and the Philippines, “the region added 40 million new internet users this year, taking the total to 400 million. That implies 70% of the region’s population is now online, the report added.”
Again, you must be careful with SPACs as in many ways, they represent a blind order. Still, 8i Acquisition is pointing its cannon at an incredibly large addressable market, providing some confidence toward LAXXU stock.
8i Acquisition 2 Potential
According to a sociological analysis published by The American Review of Public Administration, culture may have played a role in East Asian countries substantially mitigating the impact of COVID-19 relative to western nations.
“Policy instruments that infringe on individual freedom are more feasible and sustainable in East Asian culture that emphasizes collectivism. The culture governs social behavior with strong social norms and rules, is less tolerant of deviant behavior and emphasizes the sacrifice of individual freedom for the collective good during a crisis,” the study’s authors wrote.
Theoretically, then, Asian countries may be more resilient to the economic aftershocks of the ongoing pandemic, thus supporting the case for LAXXU stock. Nevertheless, Asia is not immune to its own distinct regional challenges.
As the ADB states, increasing inequality across the Asian continent represents not only risks to businesses but also threats to “social cohesion and stability.” Therefore, the collectivist sentiment that bolstered the region’s COVID-19 response could fade down the line.
Also, the globalized economy means that no advanced nation operates in a vacuum. Therefore, the home-field advantage undergirding LAXXU stock could be more diminished than initially realized.
How to Buy 8i Acquisition 2 IPO (LAXXU) Stock
Interested participants must acquire LAXXU shares at the open, which is straightforward if you know how to buy stocks. If not, just follow the steps below.
Step 1: Pick a brokerage.
Since any reputable platform will allow you to buy SPACs, you can narrow your list of best brokers that suit your investing style and ambitions.
Step 2: Decide how many shares you want.
All IPOs are risky, especially those involving shell companies. Therefore, choose a balanced share count to mitigate downside moves.
Step 3: Choose your order type.
Before trading, understand these market concepts.
- Bid: The buyer’s best offer for a stock.
- Ask: The seller’s lowest acceptable price.
- Spread: The difference between the bid-ask price, the spread indicates market risk as this is also the profit margin for market makers.
- Limit order: Buy or sell requests at a predetermined price, limit orders provide transparency but no execution guarantees.
- Market order: Market orders guarantee fulfillment but only at the current rate.
- Stop-loss order: Stop-loss orders automatically exit your position at either a predetermined price or anything lower.
- Stop-limit order: Stop-limit orders only leave positions at a specified price, but they also carry non-fulfillment risks.
Step 4: Execute your trade.
Follow these steps to execute a market order:
- Select your action type (buy or sell).
- Enter the shares you want to acquire (or sell).
- Hit the Buy (or Sell) button.
Follow the same sequence for limit orders (but include your execution price).
LAXXU Restrictions for Retail Investors
Review the Financial Industry Regulatory Authority (FINRA) rules on restricted persons before participating. Avoid investing in stocks where you have privileged information.
For those interested in buying traditional public market debuts at their initial offering (pre-IPO) price, you should consider opening an account with ClickIPO. The company democratizes the IPO process by distributing new issues to its members before they hit the open market.
A SPAC With an Eastern Flavor
While most of your portfolio likely consists of strong U.S. companies, the domestic market is a mature one. By shifting the focus eastward with LAXXU stock, you can diversify your exposure. Still, be aware that SPACs have their own unique challenges.
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