Particular objective acquisition corporations (SPACs) have been in style funding automobiles over the previous couple of years. Greater than half of corporations that had preliminary public choices (IPOs) within the U.S. in 2020 and 2021 have been SPACs, in keeping with the web site SPAC Analytics.
These corporations haven’t got enterprise operations of their very own however look to purchase companies and take them public. In 2019, there have been simply 59 SPAC IPOs. However there have been 248 and 613 in 2020 and 2021, respectively.
In 2022, there have solely been 70 SPAC IPOs to date, displaying this red-hot pattern is cooling down. However there are nonetheless loads of SPACs on the market with money trying to make an acquisition. And on July 12, FAST Acquisition Corp II (FZT 0.00%) introduced it was placing its money to make use of by merging with Falcon’s Past.
You have probably by no means heard of Falcon’s Past. Nonetheless, when you’re a travel investor who likes resorts, water parks, theme parks, immersive digital actuality (VR) experiences, and mental property that may be leveraged throughout totally different media sorts, then you definately would possibly need to get to know Falcon’s Past as a result of it’s concerned with all of this stuff.
What’s Falcon’s Past?
Falcon’s Past has three enterprise segments: the Artistic Group, Past Locations, and Past Manufacturers. The primary phase is its Artistic Group, which has been in operation for 22 years. Over this time, the combination worth of its tasks is over $100 billion. And the corporate has labored with A-list media brands like Walt Disney, Lions Gate Leisure, Lego, and extra.
To raised perceive what Falcon’s Past does, think about a deal it has with the Kingdom of Saudi Arabia. Its Artistic Group is creating a grasp plan for an upcoming water park. Not solely will the corporate assist design 22 rides, however it’ll additionally weave theme parts collectively all through the park whereas making an attempt to make use of 75% much less water than conventional water parks, recognizing how treasured this useful resource is in a rustic like Saudi Arabia.
Full-concept grasp plan offers like this usually have life spans of 4 to 5 years, giving Falcon’s Past good income visibility. And proper now, the corporate is engaged on 5 theme park offers, which collectively may very well be price $655 million over their life spans.
Falcon’s Past is trying to leverage the experience from its Artistic Group to construct its companies in Past Locations and Past Manufacturers. With the Past Locations phase, the corporate is trying to develop themed resorts that it both owns outright or co-owns with companions. And with Past Manufacturers, it hopes to monetize its personal mental property (IP) and that of sure companions by releasing films, toys, and extra.
Given its years of expertise working with prime theme parks and IP homeowners, it makes plenty of sense for Falcon’s Past to use its information towards ventures that it has bigger and longer-lasting stakes in.
Is Falcon’s Past a great inventory to purchase?
In keeping with Statista, the journey and tourism business is predicted to develop at greater than a ten% compound annual fee by 2026, reaching practically $1 trillion. Briefly, it is a huge and rising market. And the executives of FAST Acquisition II imagine there is a shift underway towards extra experiential journey, which is Falcon’s Past specialty.
Furthermore, Falcon’s Past has catalysts for long-term progress. It lately began a partnership with Melia Resorts Worldwide (SMIZ.F -7.54%), a model with practically 400 accommodations, that may very well be a robust supply of future money flows. In November, this partnership introduced a 50-50 three way partnership within the Dominican Republic to develop a $350 million resort, scheduled to open in 2023. And thru its partnership with Melia, the corporate will open two extra resorts in 2024.
Nonetheless, $350 million is some huge cash, and for this reason Falcon’s Past goes public. It’s going to get greater than $200 million from its merger with FAST Acquisition, and it intends to make use of this cash towards the Dominican Republic undertaking.
Falcon’s Past is extraordinarily attention-grabbing and may very well be a great funding. Nevertheless it’s too quickly to type a robust opinion due to how it is going public. SPAC stocks are allowed to be selective with the knowledge they share with potential traders. With Falcon’s Past, it merely did not share a lot concerning its historic or present financials, giving potential traders little to go on.
With the corporate going public at a market capitalization of $1 billion, I am undecided if Falcon’s Past is an effective alternative or not. And I will not have a robust opinion till it has been public for at the least just a few quarters, giving us a greater look underneath its hood and permitting us to get extra aware of administration. For that reason, I’ve no intention to purchase shares of Falcon’s Past proper now. Nonetheless, it is one to observe over the subsequent couple of years.
Jon Quast has no place in any of the shares talked about. The Motley Idiot has positions in and recommends Walt Disney. The Motley Idiot recommends the next choices: lengthy January 2024 $145 calls on Walt Disney and brief January 2024 $155 calls on Walt Disney. The Motley Idiot has a disclosure policy.
