How the Enhanced Games tripped over its own shoelaces

{"text":[[{"start":4.9,"text":"The Enhanced Games, last week’s Olympics-lite event for athletes on performance-enhancing drugs, was meant to be a triumph of humankind’s ability to get one over on nature. What it showed instead is that enhancement isn’t always improvement — in finance as well as sports."}],[{"start":21.799999999999997,"text":"Despite the juiced-up contenders producing a crop of personal bests and one record-breaking swim time, losers abounded. Notably, of the monetary kind. In the three weeks since Enhanced became a public company, its shares have fallen more than 70 per cent from their initial $10. Since the Games, they have halved. A business momentarily valued at $1.2bn is now worth just $350mn."}],[{"start":49.55,"text":"That might be less to do with athletic outcomes, and more with the way it came to market: through a special-purpose acquisition company. Spacs are publicly traded cash shells that merge with young, daring start-ups, endowing them with listed stock and money to spend. They account for about a third of all US IPO fundraising this year, Dealogic estimates."}],[{"start":null,"text":"

"}],[{"start":71.1,"text":"There are three flaws in the Spac model — and Enhanced fell foul of all of them. First, the money on offer doesn’t always materialise, because investors in the Spac can ask for their funds back when a deal closes. Most do. In Enhanced’s case, a potential trove of $200mn dwindled to about $4mn after 98 per cent of investors exercised their right to redeem."}],[{"start":95.44999999999999,"text":"That leads to the second problem with Spacs: investors who take back their cash still get a fistful of free shares as a bonus, which many dump at the first opportunity. "}],[{"start":105.89999999999999,"text":"Finally, there’s the sheer reputational risk from going public this way in the first place. The median Spac merger has lost 85 per cent of its value since going public, according to data from ListingTrack. This year’s crop has been slightly better, but mostly because of quantum computing companies riding the hype of a hot new sector. "}],[{"start":127,"text":"Enhanced may yet build a durable business. Its backers hope for revenue of $175mn next year from games sponsorship, over-the-counter supplements and prescription drugs such as peptides. On the same three-times multiple as online meds-peddler Hims, Enhanced could be worth $525mn. Value it in line with the Atlanta Braves, one of the few listed US sports teams, and that increases to $900mn. Those are long odds, though. The company’s filings warn of “substantial doubt” that it can survive 12 months. "}],[{"start":159.9,"text":"As in any sporting contest, there are winners. Donald Trump Jr, for example, joined an early, small investment in Enhanced’s preferred shares. Those ultimately converted to stock at a price of roughly $2. If Trump and his fellow investors sold at the company’s debut price, they would have quintupled their money. Critics complain that performance-enhancing drugs unlevel the playing field; finance is pretty good at that, too."}],[{"start":194.05,"text":""}]],"url":"https://audio.ftcn.net.cn/album/a_1780127685_3869.mp3"}