Inpixon (NASDAQ: INPX) stock is returning for another day in the sun. INPX was up 89% yesterday. Inpixon had a very good run just recently - something that then just faded away. Last time around it was because people just weren't reading the term sheets of a deal. This led them into considerable error. Details really do matter.
As we pointed out elsewhere about Inpixon: ”What matters is going and reading the term sheets. That's the details of whatever deal has been undertaken. OK, so the Inpixon subsidiary CXApp merges with KINS Tech for the Spac deal. The shareholders of Inpixon own 50% of the Spac (ie, the now CXAI stock). OK, great, so INPX owns 50% of CXApp and therefore it should bounce. In fact, it would bounce vastly more than it has, great! Except, no, no, read the actual term sheet. All of the CXAI stock was distributed direct to INPX shareholders, the company didn't retain any of it at all. The people who owned Inpixon back on Match 6th now own CXApp stock. The current stockholders of the former parent company own nothing of that stock, no indirect holding. Either you got the stock back in March or you have no interest at all. So, the run up in Inpixon was purely a result of assumptions being made and people not reading the deal details, that term sheet. The thing we learn from this? Always read the term sheet.”
Inpixon share price from NASDAQ
Now there's another deal here. Inpixon is to be used as a shell into which XTI Aircraft will merge. “Colorado-based vertical-takeoff-and-landing (VTOL) startup XTI Aircraft has announced a reverse merger with real-time location services provider Inpixon, in an apparent effort to improve access to capital markets through the latter company's membership in the Nasdaq stock exchange.”
OK, standard shell company game. There's a company with a NASDAQ quote and not much else. There's a company that would like to get onto NASDAQ but probably doesn't qualify - not been around long enough, not enough capital, maybe doesn't want to spend the time or money to try to IPO. So, one company takes over the other and there we are. This is also the explanation for the SPAC craze of the past few years.
And that is rather where we start to worry. There are still hundreds of funded SPAC companies sitting on the exchanges. All of which are looking for a good merger deal. XTI Aircraft obviously didn't entice any of those. So, err, how good a deal actually is this? That someone does a reverse into a shell rather than a SPAC is how good a sign?
