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SPAC listed therapy app for those who have hit rock bottom, hits rock bottom


21 July 2021

Niche technology has been enjoying a significant heyday over the past few months, and some of the most obscure ideas which have begun as incubator projects have come to the attention of investors, especially during the SPAC listing frenzy that has recently taken place. There has even been a bizarre pre-IPO valuation of an electric vehicle manufacturer, oddly named Canoo, which has not delivered a single product, hailing itself as a $1 billion company as it begins its zero-due-diligence blank check listing on NASDAQ.

Whilst these times are peculiar, they have spurred interest in other fringe products, and one such example is Talkspace, a 'mobile therapy' technology company listed on the NASDAQ exchange, which is headquartered in New York and was founded in 2012 by Israeli married couple Oren and Roni Frank.

The company was conceived after a transformative experience in couples therapy that saved their marriage, therefore Talkspace began as a group therapy platform, but has evolved to a company offering online psychotherapy from licensed therapists. It became publicly listed on NASDAQ, a very technology-orientated stock exchange in January this year, and began its publicly listed existence with aplomb, however it has been a downhill spiral since then.

This week, Talkspace enjoys the dubious accolade of being the bottom stock on the NASDAQ, having suddenly dipped even lower during the end of last week to an all time low since it began its decline in January.

The company went public on NASDAQ via a SPAC listing, perhaps unsurprisingly, and engaged in a $1.4 billion deal with Hudson Executive Investment Corp. providing the company with $250 million in cash to be used as growth capital back in January this year at the height of the SPAC listing trend and just before the meme stock frenzy began.

It is perhaps somewhat bizarre that firms listing on NASDAQ are able to do so with such ease, bypassing the normal and very stringent criteria for public listings on prestigious exchanges.

Talkspace doesn't exactly have a blot-free copybook. In April 2020, The New York Times published an article where they cited Talkspace employees had read transcripts from therapy sessions and that employees were instructed by the company to post fake app store reviews using burner phones, and there have been a few instances of controversy surrounding conflicting business and clinical interests, making scientific claims about its effectiveness, violating patient confidentiality, and a lawsuit against the Psychotherapy Action Network for defamation. All this within the last three years.

Either the firm will de-list, or get de-listed, leaving the Franks to keep the cash, or it will attract investors. Either way, it is one of those 'heads or tails' situations, as is now a characteristic of many of these fringe companies that have been allowed into the public trading domain via SPACs.

It could even, at a stretch, be considered a meme stock.

Risk warning: Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 74.5% of retail investor accounts lose money when spread betting or trading CFDs with ETX. You should consider whether you understand how spread bets or CFDs work and whether you can afford to take the high risk of losing your money.
Monecor (London) Ltd is a member firm of the London Stock Exchange. Authorised and regulated by the UK Financial Conduct Authority (FCA) with Financial Services register number 124721 and the South African Financial Sector Conduct Authority (FSCA) under license number 50246.
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