(Bloomberg) — Investors who piled into SPACs at the height of the industry’s mania with dreams of triple-digit returns are facing a harsh reality: They may get bought out for little more than pennies on the dollar.

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Insurer MetroMile Inc. is trading around $1 a share after accepting an all-stock buyout offer, and Talkspace Inc., hovering near $1.70, has reportedly drawn interest for a merger of its own. That’s nowhere near the $10 mark where special-purpose acquisition companies typically debut.

Alas, the blank-check boom has turned into a bust, leaving 78 of the roughly 371 firms that merged with a SPAC floundering under $2 a share, data compiled by Bloomberg show. About 25 ex-SPACs are trading below $1, a sign that they may soon be banished from high-profile exchanges.

At least three of the post-merger companies have since agreed to buyouts at fire-sale prices. At least 65 are likely to need more financing over the next year just to keep the lights on, according to Bloomberg data that estimates a company’s cash needs.

“Who ends up losing when a company comes to the market that’s overvalued?” said Greg Martin, managing director at Rainmaker Securities. “It’s the new investors coming into the company after it goes public.” The majority of ex-SPACs “shouldn’t have been public in the first place” and were ascribed valuations that weren’t appropriate, he said.

There’s more: Telemedicine firm SOC Telemed Inc. was sold in April to Patient Square Capital in a deal that gave shareholders $3 in cash. And senior-care facility operator Cano Health Inc. remains down roughly 60% from its June 2021 debut despite a push in March from Dan Loeb’s Third Point for the company to put itself up for sale.

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Blind Pools

That’s not how it was supposed to work. SPACs are called blank checks because they raise cash in a public offering with the goal of buying a private business that hasn’t been identified yet. Ideally, the SPAC managers are experts in their industry who will use their smarts to pick a winner and help it grow, along with the stock price.

Indeed, Metromile set goals to increase its auto insurance premiums to an annualized $1 billion by 2024. But soft sales and high loss ratios plagued the company; last November, it agreed to an all-stock sale to Lemonade Inc. It’s now valued at about $131 million, a fraction of the $2.2 billion it carried in February 2021, when Metromile debuted after merging with a SPAC.

Talkspace, whose public faces included Michael Phelps and Demi Lovato, hasn’t traded above $2 since the first week of the year, drawing interest from private equity-backed Mindpath Health, according to Axios. The mental health services provider had aimed to be cash-flow positive in 2022; now Wall Street doesn’t expect that until 2026, Bloomberg data show.

A representative for Talkspace said the company is well-capitalized and declined to comment on the report of a potential takeover bid. Representatives for Metromile did not respond to requests for comment.

SOC Telemed failed to meet expectations and had to cut costs and staff and bolster its finances before its sale to Patient Square Capital. In March, Loeb’s firm blamed his push for Cano to find a buyer on “the market’s largely unfavorable view” of companies that used SPACs to go public.

In one of the stranger twists, Redbox Entertainment Inc. agreed to a buyout that valued its equity at just $31 million — a far cry from the $693 million in enterprise value attained in its SPAC deal last year. The pending all-stock sale, to Chicken Soup For The Soul Entertainment Inc., makes each share worth only about 61 cents, but meme traders looking to punish short sellers have pushed the stock up more than 1,500% beyond that level.

Mostly, though, the market hasn’t been forgiving of firms that under-delivered. The De-SPAC Index, which tracks companies after they’re bought by a blank check, is down about 78% since a February 2021 high.

“A company may have taken advantage of the market to get a good valuation, but if they’re spending two or three million a year just to be compliant as a public company and they’re not performing, there’s certainly that risk,” said Mike Bennett, managing partner at investment banking firm Crewe Capital. Going public via SPAC merger is “almost a negative thing now, so companies are less likely to want to do that unless they have to.”

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