Why Is This SPAC Surging 160% Today?

Shares of Locust Walk Acquisition Corp LWAC are surging higher Wednesday morning after the merger with eFFECTOR Therapeutics was approved.

eFFECTOR Therapeutics is focused on selective translation regulation inhibitors to treat cancer. The SPAC merger valued the company at $419 million, including a $60 million PIPE with an investment from Pfizer Inc's PFE venture capital arm Pfizer Ventures.

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Why The Stock Is Soaring: Locust Walk Acquisition raised $175 million in its IPO, selling 17.5 million shares in its offering.

SPAC expert Julian Klymochko tweeted that 16.98 million LWAC shares were redeemed at the merger vote, representing 97% of shares outstanding.

“That is the highest redemption rate I’ve ever seen,” Klymochko tweeted.

The result of the high redemption made LWAC a low float stock with $5.2 million remaining in the trust and around 525,000 shares in the float.

More shares of the company will become available after the merger is complete and PIPE shares become tradeable.

The move on Wednesday follows several other SPAC mergers that had heavy redemption and became low float stocks.

Helbiz Inc HLBZ shares hit $25 during the merger process after seeing heavy redemption. Shares now trade at $7.05.

Wheels Up Experience Inc UP shares hit $15 after seeing a redemption rate of 55.8% during the merger vote. UP shares now trade at $7.92.

Shares of eFFECTOR will trade as EFTR on the Nasdaq once the deal is complete.

LWAC Price Action: Shares are up 162% to $23 at the time of publication, earlier hitting a high of $70 in premarket trading. Prior to the merger being approved, shares of LWAC traded between $8.33 and $10.05.