Social Capital Hedosophia review

Social Capital Hedosophia’s SPACs offer privately held companies another avenue to the public market. Before you hop on the bandwagon, bear in mind that this fresh-faced company has yet to establish a solid track record for itself.

What is Social Capital Hedosophia?

Social Capital Hedosophia is a grouping of 6 special purpose acquisition companies (SPAC) founded in 2019 and headquartered in Palo Alto, California. The blank check company group was founded by tech executive and venture capitalist, Chamath Palihapitiya. It was created with the intention of acquiring privately held companies to bring them to the public market.

While still relatively young, Social Capital Hedosophia made its fair share of headlines when it acquired Virgin Galactic — the British commercial spaceflight company — in 2019. Following the success of its first merger, Palihapitiya said there was plenty more in the works for Social Capital Hedosophia.

Social Capital Hedosophia vs. Social Capital

Both Social Capital and Social Capital Hedosophia were founded by Chamath Palihapitiya. And although they share similar names, they’re separate entities with unique investment objectives.

Social Capital is Palihapitiya’s private venture capital firm, founded in 2011 and headquartered in San Francisco. The firm backs companies from a variety of industries, including Bustle, Imperium, Slack, SurveyMonkey and Wealthfront.

Unlike Social Capital Hedosophia, Social Capital doesn’t acquire the companies it invests in. Instead, the venture capital firm focuses on funding startups in emerging markets with high growth potential. To date, it has made 381 investments and 49 exits. However, Social Capital has also created 6 SPACs.

How can I invest in Social Capital Hedosophia?

You will need a brokerage account to invest in Social Capital Hedosophia in one of 2 ways:

• Invest in the SPAC itself. Look up one of the SPAC’s ticker symbols and add that stock to your portfolio.
• Buy stock in a company the SPAC merges with. Invest in one of the SPAC’s acquired companies, like Virgin Galactic, which now has a dedicated ticker symbol.

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Social Capital Hedosophia’s IPOs

Despite its short operating history, Social Capital Hedosophia has been busy — and has big plans for upcoming acquisitions.

Past IPOs

As of February 2021, Social Capital Hedosophia has a handful of companies under its belt including Virgin Galactic (NYSE: SPCE); Opendoor (NasdaqGS: OPEN), a real estate portal; and Clover Health (NasdaqGS: CLOV), a Medicare Advantage plan.

Investors should note that Clover Health is facing a legal battle. Short-selling specialist Hindenburg Research on February 5 claimed Clover Health “lured retail investors into a broken business facing an active, undisclosed” Department of Justice investigation. Clover Health claimed it is cooperating with the SEC in an investigation launched by the report.

Upcoming IPOs

In 2021, SoFi announced its intention to go public by merging with Social Capital Hedosophia Holdings V. The merger would value the millennial-focused financial services firm at $8.65 billion — but no set date has been announced. Also known as Social Finance, the company emerged in 2011 as a student loan refinancer. It now offers various financial products including credit cards, mortgages and brokerage accounts that offer access to cryptocurrency.

How to buy SoFi stock in Canada

Social Capital Hedosophia stocks

In an episode of his All-In Podcast, Palihapitiya revealed that he reserved ticker symbols IPOA through IPOZ on the New York Stock Exchange. Its first SPAC, Social Capital Hedosophia I (IPOA) merged with Virgin Galactic. Iterations II (IPOB) and III (IPOC) merged with Opendoor and Clover Health. Iteration V (IPOE) plans to merge with SoFi. And as for the rest of its ticker symbols? It’s anyone’s guess.

In the same podcast episode, Palihapitiya said he has $100 million tied up in each deal to demonstrate his commitment to potential investors. As of April 2021, Social Capital IV (IPOD), Social Capital V (IPOE) and Social Capital 6 (IPOF) are available for public investors to purchase on the major exchanges.

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Bottom line

Companies like Social Capital Hedosophia offer privately held companies as an alternative to the traditional IPO. It has ambitious plans for the future and the ticker symbols to show for it — but much remains uncertain about the future of this special purpose acquisition company.

To invest in a SPAC or a company it acquires, you’ll need a brokerage account. Compare your options across multiple platforms to find a broker that can cater to your budget and investment needs.

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