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Talkspace (TALK) Stock Rallied 46.9% on Acquisition Rumors

Simon Mugo trader
Updated 28 Nov 2022

The Talkspace Inc (NASDAQ: TALK) stock price rallied 46.9% on news that American Well (Amwell), an Israeli-American company, is negotiating to buy the company for $200 million valuing each outstanding share at $1.50.

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Investors cheered the news, given that the purchase price represents a 150% premium to Talkspace’s closing share price on Friday of $0.60. The company is valued at $95.5 million and had $150 million cash at the end of Q3 2022.

The online mental therapy company has had a spectacular fall from grace ever since going public via a SPAC (Special Purpose Acquisition Company) merger in June 2021 in a deal valued at $1.4 billion. 

Since going public, the founder Oren Frank was ousted as CEO despite successfully leading the company since 2012. The SPAC operator, Doug Braunstein, changed the company’s operating model by installing a temporary CEO to lead it as it pursued a different strategy. 

It had become evident to the company’s management in 2021 that the high costs of acquiring new users were unsustainable and that it had to tailor its offering to businesses that could offer its product to their employees as a benefit. 

However, the departure of Oren and Roni Frank, the couple that founded the company, along with most of the management team that helped them run the company, was engineered by Braunstein shortly after the SPAC merger. 

The rapid destruction of capital that ensued shows that it was a bad idea to quickly get rid of the team that had built the app and could have steered the company in a new direction. From being valued at $1.4 billion to its current valuation of $95.5 million, Talkspace has lost over $1.3 billion.  

Therefore, while the deal with Amwell represents a premium to Talkspace’s current stock price, investors who bought the shares during the SPAC merger are sitting on massive losses. Talkspace is just one of many companies that have since imploded following the 2020-2021 SPAC merger craze.  

*This is not investment advice. 

Talkspace stock price. 

The Talkspace stock price rallied 46.83% to trade at $0.8856, rising from Friday’s closing price of $0.6000.

Simon has over six years of professional trading experience across FX, commodities and equities. He has a strong passion for financial markets and is particularly focused on price action trading