Hypothesis

Wolf does his usual excellent graph and excellent explanation on the bankruptcy of a bitcoin “mining” company.

The graphs for SPACs and IPOs are so consistent that they suggest a hypothesis.

IPO = LBO.

The usual myth tells us that an IPO is designed to provide capital for a company to grow. The graphs tell us the opposite. An IPO is designed to suck money out of Greater Fools while forcing the company to lose its proper feedback goal. A privately held company seeks profit, which promotes real products and real services and real employees. After the IPO, the company must seek to maximize Share Value for the IPO brokers and the (optional) SPAC brokers. After the company loses its soul, it’s bound to decline.

For many of these recent IPOs and SPACs the evil intention is simpler, though perhaps less malicious. The brokers see that the company is ALREADY bound to fail, so they suck out its life at the last minute before it’s done. More like euthanasia than murder.

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