Citron's Andrew Left Supports SPAC Trend, But Nikola 'Didn't Pass The Smell Test'

Citron Research founder and notorious short-seller Andrew Left weighed in on the special acquisition company (SPAC) trend on Wall Street during an appearance on Benzinga’s PreMarket Prep show Tuesday morning.

Many companies have been choosing to go public via a SPAC merger rather than the traditional IPO route. The latest is Playboy, reportedly negotiating a jump to the public markets via a SPAC merger. Left said investors need to be extremely careful investing in SPACs.

“You have to know exactly what you’re buying,” Left said.

He said he saw the Nikola Corporation NKLA disaster coming a mile away.

“It was obvious. When you saw Trevor, it was so obvious he wasn’t Elon. It was being pushed out. Obviously, the name Nikola was a play on Tesla. Everything about it was a copycat. It didn’t make sense. It didn’t pass the smell test” Left said.

See Also: Chamath Palihapitiya Talks SPACs At Benzinga Boot Camp: 'It Unlocks Access To Growth Companies'

Left Supports The SPAC Path: Just because Nikola ended up being a disastrous SPAC investment doesn’t mean all SPACs are dubious. Left said DraftKings Inc DKNG is an example of a SPAC merger that has been a legitimate investment with plenty of upside.

“The free lunch is being in the SPAC before it even rolls up, before it goes from $2 to $10 to $18. Be the guy at $2. But once you’re the last guy in, you have to know what you own,” he said.

Left said investors shouldn’t treat SPACs like they treat Apple, Inc. AAPL, Amazon.com, Inc. AMZN or other investments. However, he said he’s supportive of the SPAC route to the market as an IPO alternative.

“If you look at all the dog meat IPOs that have been brought public by investment banks because they have no responsibility on their name because they are so big, I don’t mind the SPAC within itself if there’s a quality company. If people want to invest in a jockey, I totally understand that.”

Watch to the full interview with Andrew Left in the clip below, or listen to the podcast here

PreMarket Prep is a daily trading show hosted by prop trader Dennis Dick and former floor trader Joel Elconin. You can watch PreMarket Prep live every day from 8-9 a.m. ET Benzinga's YouTube channel, and the podcast is on Spotify, iTunes, Google Play, Soundcloud, Stitcher and Tunein.