VPC Impact Acquisition Holdings (NYSE:VIH) is a Special Purpose Acquisition Company planning to take cryptocurrency exchange platform Bakkt public via a reverse merger. The merger was first announced in January this year and boasted an enterprise value of $2.1 Billion. The merger was expected to close out in the second quarter, however this has been delayed due to amendments made to the SEC.
However, VIH stock has remained a speculative play as investors aim to squeeze the stock based on its seemingly high short interest float. With investor interest at an all-time high, this article will breakdown everything you need to know about VIH stock.
Who is VPC Impact Acquisition (NYSE:VIH)?
The blank check company raised $200 Million in September last year, issuing 20 Million units at a $10 PIPE offering price. VIH stock had a primary focus in acquiring a high-growth business in the fintech space. The SPAC’s target, Bakkt, is a cryptocurrency platform that allows consumers and institutions to buy, sell, store and spend digital assets. The platform provides a way for traditional investors to get involved in Bitcoin with US federal regulatory oversight.
“The average consumer holds a wealth of digital assets but rarely tracks their value and lacks the tools to manage and utilize them…I’m excited to join the management team of a company, at this important time in its expansion, whose vision is to bring trust and transparency to digital assets through innovation and technology and, through that process, unlock trillions of dollars currently held in customer and loyalty accounts and allow consumers to put them to work.”
Bakkt CEO, Gavin Michael in January press release
Why is VIH stock driving investor interest?
In recent weeks, there has been little to no news on VIH’s progress in finalising the SPAC merger with Bakkt. The higher levels in investor interest have been primarily driven by rising speculations of a potential short squeeze.
As of August 13, VIH had reported a percentage of float shorted at 34.27%. Generally speaking, a short float below 10% suggests the stock has a bullish sentiment while over 10% indicates a higher level of pessimism towards the stock. The high levels of float shorted is driving speculation of a potential squeeze on VIH stock.
What is the VIH stock forecast?
Despite the increased interest in a potential VIH stock squeeze, the proposed merger is expected to add value to Bakkt’s balance sheet if the merger is finalised. From initial reports in January, the combined company expects to raise $500 million in cash to add to the combined companies balance sheet.
Bakkt forecast that the cryptocurrency market will grow to $3 Trillion by 2025 and the companies TAM will grow to $5.1 Trillion in the same year. Bakkt’s January investor presentation, Bakkt forecasts revenue to grow at a CAGR of 75% with 2025 revenues expected to be $515 Million. The company also noted that they forecast to be cash-flow positive by 2023.
However, it is worth noting the extended delay in the merger finalisation date may impact these forecasts.
The Bottom Line – VIH stock
Overall, the merger remains subject to certain customary closing conditions which includes the approval of VIH shareholders. However, it is clear speculators are eyeing off a potential short squeeze with high levels of float shorted on VIH stock. In addition, the combined companies forecasts highlight the vastly growing potential of the cryptocurrency market.
In saying this, the combined company still faces a slowing SPAC market and the inevitable sale of PIPE investments. We will continue to monitor VIH stock as the company closes in on its merger with Bakkt.
The information above is not financial advice. Youth Investment Group has no liability for personal financial interests or investment decisions. You should make your own investment decisions based upon your own research and what you believe is best for you.
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