Another day, another fintech unicorn goes public via a SPAC. On Thursday, Acorns announced that it will combine with the Pioneer Merger SPAC, valuing Acorns at $2.2 billion. Acorns is a pretty cool app that links to your credit card and automatically invests your spare change from transactions in index funds. It charges $1/month for that service but has recently added $3/month and $5/month options for additional features such as bank accounts or retirement plans.
The pandemic has supercharged growth for many investing and trading apps as people have nothing better to do than be on their phone all day. (meme stocks have also been great for them) Investing apps such as Wealthfront and Betterment both had their best quarters to start the year. Acorns had their best three months as well, with subscribers doubling from the fourth quarter to 4 million and is projecting 8 million by 2023.
Existing investors in Acorns include companies such as PayPal and Comcast, and celebrities including Jennifer Lopez and The Rock. As part of the transaction, Pioneer would invest $400 million, with $165 million coming from a private placement including investors such as Blackrock. Strangely the company will trade under the ticker symbol $OAKS, which is the Company's analogy of growing acorns into “mighty oaks.”
Short Squeez Takeaway: While the pandemic and meme stock frenzy has been great for investing apps (Just ask Robinhood that has 20 million users now) it remains to be seen what growth will look like once people are not sitting inside their houses 24/7 and if Acorns can hit their lofty subscriber targets.