What’s Next After the IPOE Merger?

Virgin Galactic, Opendoor, and Clover Health have gone public through reverse mergers with SPACs sponsored by Palihapitiya and the post-merger performance has been mixed.

Palihapitiya SPAC post-merger performance

So far, Clover Health is arguably the worst-performing stock after the merger with a Palihapitiya-sponsored SPAC. Clover Health trades at roughly half of what it did when the merger was completed. It’s also below the IPO price of $10—the only Palihapitiya SPAC trading below the price level.

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Virgin Galactic is way above the price level from when the merger was completed. However, Opendoor trades below the price level when the merger was completed.

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It isn’t helpful to generalize the situation because there has been a sell-off in growth names in 2021. All of the SPACs sponsored by Palihapitiya have fallen sharply from their peaks amid the painful sell-off.

However, there have been controversies about some of his investments. First, Hindenburg Research accused Clover Health of fraud and hiding facts from investors. Also, Palihapitiya selling off his stake in Virgin Galactic didn’t sit well with some investors. They thought that he was cashing out too early.

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ipoe sofi merger date

SoFi stock is a good long-term investment.

SoFi has a pro forma market capitalization of $17.5 billion and an EV (enterprise value) of around $19.5 billion. This would mean a 2021 EV-to-sales multiple of just under 20x. Looking at the 2025 multiples, SoFi is valued at a 2025 EV-to-sales multiple of 5.3x and an EV-to-EBITDA multiple of 16.6x.

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sofi versus affirm valuation
Source: TIKR

Valuation multiples for fintech stocks have come down

While IPOE stock also crashed amid the sell-off in growth and fintech names, it recovered a lot of lost ground in May. Most of the gains came after the company announced the merger vote.

Overall, I don’t expect much upside in the near term from SoFi stock when it lists. However, it’s still a good long-term investment. If the company can get a bank charter, it will be another growth driver. For now, don’t expect much from the stock.

View more information: https://marketrealist.com/p/ipoe-merger-sofi-stock-forecast/

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