The SPAC Bubble Has Popped. Where to Find Bargains Now.

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The SPAC bubble has popped.

After a three-month run of immense popularity to start 2021, special purpose acquisition companies have seen investor appetite dry up. New issuance has slowed to a trickle. Those still seeking merger partners have been hit hard, while those that have completed mergers have been hit harder.

But every blowup brings opportunity, and this one is no different. Investors should use the declines to pick over the carnage and identify the quality SPAC sponsors still searching for acquisitions, or those with just- or still-to-be-completed deals.

Make no mistake, the damage is real. The Defiance Next Gen SPAC Derived exchange-traded fund (SPAK), which holds more than 230 SPACs and SPAC-merged companies, is down more than 32% from its 52-week high, while about a quarter of the stocks it holds have been cut in half from recent peaks. More than half the companies are trading below $10, the price where nearly all SPACs get priced, which has caused issuance to dry up. Why would investors pay $10 for a new SPAC when they can buy an existing one for less than that?

Not every SPAC is being shunned, however. Bill Ackman’s

Pershing Square Tontine Holdings

(PSTH) is still looking for a merger partner. Ackman has hinted that a deal with an “iconic” company could be announced in a matter of weeks. The SPAC has dropped just 27% from its 52-week high and, at almost $25 a share, is still trading well above its $20 IPO price.

Investors should also check out

Fisker

(FSR), which completed its merger with Spartan Acquisition in October. Stocks in electric-vehicle startups have been among the worst SPAC performers, and Fisker, whose first product is an electric SUV, is no exception—its stock, at Friday’s close of $10.50, is down about 67% from its 52-week high of $31.96. The future of Fisker isn’t a slam dunk. It has no sales and its SUV isn’t due until late 2022. But it has cash and quality partners, including auto-parts supplier

Magna International

(MGA). Fisker reports earnings on May 17, and any more good news could propel shares higher.

Then there’s home-industry software provider

Porch Group

(PRCH). At $14.98, its stock is down about 39% from its February 52-week high. Porch has something many SPACs don’t—actual sales. It last reported revenue of $19.5 million for the fourth quarter of 2020, and investors will get an update when it reports earnings on May 17.

Porch trades for about seven times estimated 2021 sales. That’s high, but a discount to other large software companies. What’s more, home sales are booming, which should provide a nice tailwind for the company. Wall Street likes the stock, too. Four analysts cover it and all four rate it Buy, with an average price target of about $26, up more than 70% from Friday’s close.

Write to Al Root at allen.root@dowjones.com and Nicholas Jasinski at nicholas.jasinski@barrons.com