TradeZero set to go public through $550 million SPAC merger
New York-based online broker-dealer, TradeZero will go public through a merger with a blank-check firm in a deal that values the combined entity at $556 million, the companies said on Tuesday.
The new company will be called TradeZero Global Inc. upon the closing of the business combination with Dune Acquisition Corp (NASDAQ: DUNE) and is expected to be listed on the New York Stock Exchange under a new ticker symbol, “TRAD”.
This is the latest example of online trading brokers catching the boom of special purpose acquisition companies (SPACs). The most notable example was eToro and US SPAC Fintech Acquisition in a deal that values the social investment platform at a massive $10.4 billion.
TradeZero America reported a massive spike in new account openings since the frenzied share dealing in GameStop and other firms emerged, fuelled by Reddit chat boards. Earlier this year, the company said its new account applications surged by more than 200 times compared with the same period in 2020. TradeZero attributed that to a huge interest in unrestricted access as investors look to pick up stocks that have been the focus of a trading war between amateur investors and Wall Street pros.
TradeZero America allows its ‘active traders’ to select the specific destination where their orders are routed for execution. Those who maintain a minimum account balance of $30,000 can take advantage of these features to increase both the speed and likelihood of order execution, while simultaneously lowering their trading costs by taking advantage of rebates.
TradeZero began as an international company in 2015, and investor demand led to the formation of its US arm, TradeZero America, which provides commission-free stock and options trading across all US states.
“We believe that we are in the early-innings of addressing an underserved end-market ripe for continued investment. As such, we are pleased to announce this milestone of a public listing and partnership with Dune, which we believe will accelerate our strategic direction to best capitalize on the expanding scope of active trading,” stated Daniel Pipitone, Co-Founder and CEO of TradeZero.
Carter Glatt, Founder and CEO of Dune, continued, “We are excited to partner with Daniel, Kosta Corriveau, and the rest of TradeZero’s management team to bring this next-generation trading platform to the public markets. Complemented by Dune’s synergistic thought leadership in Fintech and coupled with the powerful secular tailwinds of the rise of the retail trader and an attractive entry valuation relative to publicly-traded peers, we believe that a combination with TradeZero will provide significant value to our public investors.”
In essence, a SPAC is a shell company that lists on a stock exchange with the purpose of buying another business and taking it public without consuming the time, costs and regulatory oversight required for traditional IPOs.
Many celebrities were caught backing SPACs, which have raised more than $70 billion in 2020. That sum was greater than all the funds that the sector raised in the past 10 years.
The SEC warned that SPACs endorsements could be illegal if its promoters do not disclose the compensation they received in exchange for the promotion. The warning marks an effort from the US top watchdog to address what has become a recent trend.