TradeStation Stock Coming To NYSE In 2022, With $1.43 Billion SPAC Merger

Online Brokerage company, Tradestation has announced its intention to be listed on the New York Stock Exchange in 2022. The firm made this disclosure on Thursday, saying it would go public through a merger with Quantum FinTech Acquisition Corporation — a special purpose acquisition company (SPAC).

SPAC Deal Breakdown

The SPAC deal is expected to be completed within the first half of 2022. Once done, Tradestation will be listed on the NYSE under the ticker “TRDE”. The transaction will see the combined company value reach approximately $1.43 billion, an implied pro forma enterprise value.

Consequently, the deal will provide $316 million in cash if no Quantum FinTech public shares are redeemed. This sum comprises $201 million in cash held in Quantum FinTech’s Trust accounts. Another $115 million is raised through private investments in public equity (PIPE) — the private sale of Quantum stock. 

The PIPE comprises investments of $50 million from Monex and another $50 million from Galaxy Digital, XBTO Ventures LLC and Appian Way Asset. Upon completion, approximately 80% of the merged company will come under the ownership of Monex, TradeStation’s parent firm.

Speaking on the announcement, John Bartleman, President of TradeStation, expressed his company’s delight with the development.

“In recent years, our appeal has grown from seasoned active traders to include a new generation of traders and investors who are drawn to TradeStation’s powerful analytics and order-entry tools to help them identify opportunities, plot and test trading strategies and execute those strategies on a trusted, reliable and versatile platform. Throughout TradeStation’s history, we have grown by providing our clients with a multi-asset trading platform, innovative new products and rich educational content that builds confidence among seasoned and first-time investors alike.”

The proceeds from the transaction will help fund the company’s plans. TradeStation hopes to accelerate account and revenue growth through increased brand awareness and performance-based marketing spending. The funds will also help improve product development and IT headcount to complete specific new products while adding liquidity to support an increasing customer base.

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What Is a SPAC merger?

SPAC, or special purpose acquisition company, is another term for a “blank check company”. It is a non-commercial corporation formed solely to raise money through an initial public offering (IPO). Usually, these SPAC are acquired or merged with existing companies.

Recently, there has been a surge in the popularity of SPACs. In 2020, over 247 SPACs were created with $80 billion invested. In the first quarter of 2021, 295 newly constituted companies raised a record $96 billion. In comparison, just two of them were introduced to the market in 2010.

SPACs are typically founded by investors with experience in a given industry to pursue opportunities in that sector. SPAC creators usually have an acquisition target in mind from inception but never reveal the company. This ensures that they avoid significant disclosures during the IPO process. Underwriters and institutional investors are also involved before SPACs offer shares to the public.

Funds raised by SPACs through an IPO are held in an interest-bearing trust account. Investors can only access this money once an acquisition is complete or the SPAC becomes liquidated. Typically, they have a lifespan of two years to execute or risk liquidation. Upon purchase, they become listed on a stock exchange.

Furthermore, SPACs offer the advantage of speed to companies who want to become publicly listed. It allows these companies to achieve their aim in a matter of months. Meanwhile, the typical IPO process takes a more extended period. Also, the target company may be able to negotiate a higher price when selling to a SPAC due to the limited timeframe for closing a sale. 

Despite this, SPACs risk having retail investors stuck with an overhyped or, sometimes, fraudulent investment. The returns obtained from these SPAC investments may also fall short of expectations.

TradeStation’s Value Proposition

TradeStation offers trading and analytical platforms with a self-clearing online brokerage service. Its services cover stocks, ETFs, equities and index options, commodity and financial futures, futures options, and cryptocurrencies. 

These trading platforms are available on desktop, web, and mobile devices. API technologies that allow third-party platforms to access TradeStation’s brokerage services are also provided. TradeStation offers extensive and expanding learning content aimed at instilling confidence in new investors and seasoned traders.

Do you see TradeStation’s public listing bringing growth to the company? Let us know your thoughts in the comments below.