PayPal-, Celebrity-Backed Investing App Acorns Announces SPAC Deal: What Investors Should Know

The savings and investing app Acorns Group is going public in a SPAC deal announced Thursday morning.

The SPAC Deal: Acorns is merging with Pioneer Merger Corp PACX in a deal valuing the company at a $2.2 billion equity value.

The deal includes an oversubscribed and upsized PIPE.

The merger is expected to close in the second half of 2021 with shares of the new company trading as "OAKS" on the Nasdaq.

Acorns CEO Noah Kerner plans to contribute 10% of his ownership in a new program giving shares of the company to eligible Acorns customers. An additional 10% ownership in Acorns will also be offered from sponsors as part of the program.

Investors in the company include PayPal Holdings PYPL, BlackRock Inc BLK, Ashton Kutcher, Jennifer Lopez and Dwayne “The Rock” Johnson, according to CNBC.

About Acorns: Founded in 2014, Acorns says it prides itself as being a category creator and category leader. The company offers subscription-based pricing for newer investors.

The Acorns subscription offerings are Lite ($1/month), Personal ($3/month) and Family ($5/month). Acorns is the largest subscription-based service for financial services, with more than 4 million members.

Portfolios are created for customers using algorithms designed by world-renowned Nobel laureate economist Dr. Harry Markowitz.

The company’s churn rate is 1.3%, according to its investor presentation. The company retains 80% of subscribers after 12 months. 

Related Link: Acorns Vs. Stash

Acorns Growth Projections: Acorns is guiding to grow to 10 million members by the year 2025. The company said in its presentation it has a massive total addressable market with room to grow average revenue per user.

Last year, the company’s customer base was split as follows: 59% for the Lite offering, 33% for Personal and 8% for Family. The company highlights in its presentation that its new customer run rate is 25% Lite, 61% Personal and 14% Family.

Going forward, the company plans to expand its pricing tiers, offer ESG portfolios, offer smarter banking services, allow portfolio customization and explore strategic M&A.

Financials: Acorns had revenue of $71 million in 2020. The company is guiding for revenue to hit $126 million in fiscal 2021 and $245 million in fiscal 2022.

The company had 3.5 million subscribers at the end of 2020 and plans on hitting 4.6 million subscribers by the end of 2021.

Revenue is split 79% subscription services and 21% non-subscription services.

Acorns has gross margins of 80%.

PACX Price Action: Shares of Pioneer Merger were up 3.38% premarket Thursday at $10.08.