Inspirato: Warrant Price Suggests An Impending Collapse On The Stock

Mar. 07, 2022 9:55 AM ETInspirato Incorporated (ISPO), ISPOW36 Comments
Edward Vranic, CFA profile picture
Edward Vranic, CFA
5.77K Followers

Summary

  • ISPO closed Friday at $42.48 and ISPOW closed at $3.60. The warrants have a strike price of $11.50. This means they are trading at $27.38 below their intrinsic value.
  • Arbitrage can't yet be acted on until the warrants are exercisable, which is 30 days after the deal closed - March 15th.
  • I expect the stock to decline heavily to less than $20 and the warrants increase slightly as the arbitrage gap quickly closes after this date.
  • If you must have a position in ISPO, consider buying the warrants, not the stock.
  • I have a small warrant position that I intend to sell once the arbitrage opportunity dissipates.

Trading Charts on a Display

da-kuk/E+ via Getty Images

For those who don't believe in the saying "history repeats itself", they obviously aren't familiar with Special Purpose Acquisition Companies, or SPACs for short. Inspirato Incorporated (NASDAQ:ISPO) is yet another ex-SPAC that has shot up

This article was written by

Edward Vranic, CFA profile picture
5.77K Followers
I am a private investor based out of Toronto, Canada and I have been investing since 2003. After 8 years in Corporate Finance with a Canadian Telecom company I have decided to dedicate myself full-time to the capital markets. I write on Seeking Alpha to demonstrate my financial analysis and writing skills across a variety of industries and to take advantage of any story-based trading opportunity that may arise. My passion and greatest depth of knowledge is on Canadian small cap stocks and I consider my blog posts to be some of my best work. I am interested in any freelance opportunities that may arise outside of Seeking Alpha on Canadian or American listed stocks.

Disclosure: I/we have a beneficial long position in the shares of ISPOW either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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