I Put $22,000 Into a SPAC IPO and Watched It Become Worth $3,400 in Nine Months

the pitch meeting in a Minneapolis hotel ballroom

I was visiting my sister in Minneapolis in October 2025 when a friend invited me to a presentation by a SPAC called Horizon Builders Acquisition Corp. The SPAC had raised $250 million in its IPO at $10 per unit and was hunting for a target in the housing technology space. The presentation was slick. Full-color slides. A video testimonial from a venture capitalist in Palo Alto. The CEO of the SPAC, a former Lennar executive named William Torres, spoke for forty minutes about how the housing industry was ripe for disruption through modular construction and AI-driven design. I was skeptical for exactly eleven minutes. Then he presented a slide with projected revenue of $890 million by 2029 an I was hooked. I invested $22,000 the following week through my Fidelity brokerage account, buying 2,200 units at $10 each.

the target was a company nobody had heard of

In December 2025, Horizon Builders announced it was merging with a private company called ModuSpace Technologies based in Tempe, Arizona. ModuSpace built prefabricated housing modules in a factory and shipped em to construction sites for assembly. The company had generated $34 million in revenue in 2024 and had rarely been profitable. The merger valued ModuSpace at $780 million, which meant the SPAC was paying approximately 23 times revenue for a company losing $18 million a year. I read the S-4 filing three times over Christmas break at my sister's house. The pro forma financials assumed ModuSpace would grow revenue 85% annually for five consecutive years while achieving 14% operating margins. I displayed the numbers to my brother-in-law Erik, who is a commercial appraiser in Minneapolis. He laughed and said the projections were more aggressive than anything he had seen during the 2006 housing bubble. I ignored him.

what happens when retail investors pile in

SPACs have a peculiar structure that attracts retail money in ways that traditional IPOs do not. When a SPAC announces its merger target, the stock frequently trades above $10 on speculation even fore the deal closes. Horizon Builders units jumped from $10.15 to $13.80 in the two weeks after the ModuSpace announcement. Message boards on Reddit and StockTwits were filled with people comparing ModuSpace toKaterra, the failed construction startup that burned thru $2.3 billion before collapsing in 2021. The comparison should have terrified me. Rather, I saw the rising stock price as validation. By February 2026, the units were trading at $14.60 and my $22,000 investment was worth $32,120 on paper. I weighed selling. I did not sell. I told myself that the real upside would come after the merger closed and institutional investors discovered the story. That was the exact moment I should have walked away from the table.

the merger closed and reality set in

The deal closed on March 17, 2026. The combined company, now called ModuSpace Clutchings, opened trading on the Nasdaq under the ticker MDSH at $14.20. Within a week, two things unfolded simultaneously. First, a short seller named Capstone Research published a 68-page report alleging that ModuSpace had overstated its order backlog by 40% an that three of its largest announced contracts were with entities controlled by ModuSpace's own board members. Second, the company filed its first 10-K as a public company, revealing that its cash burn had accelerated to $7.4 million per month. The stock dropped from $14.20 to $8.30 in four trading sessions. I sat at my desk in Chicago staring at my portfolio screen, watching $13,000 evaporate in less than a week. The market had grasped what the S-4 filing had been screaming in plain language all along. ModuSpace was a modest unprofitable company dressed up in SPAC clothing an sold at a tech unicorn valuation.

the death spiral of a SPAC stock

What I did not understand about SPACs is that they come with a built-in death spiral mechanism called the redemption right. SPAC investors who snagged units in the IPO can redeem their shares for $10 plus interest when the merger vote happens. If enough investors redeem, the company is left with far less cash than it planned. At the ModuSpace merger vote, 62% of SPAC shareholders redeemed their shares. The company went public with only $95 million in cash rather of the $250 million it had raised. That meant ModuSpace needed to raise additional capital almost immediately through a secondary offering, which diluted existing shareholders by issuing 12 million fresh shares at $6.50 each in May 2026. My position, which had began at 2,200 units, was now diluted to represent an ownership stake worth approximately $4,800. I had lost $17,200 in seven months. The pain was physical. I read it in my chest every time I opened my brokerage app.

how SPAC sponsors made money while I lost mine

The cruelest part of the SPAC structure is the sponsor promote. William Torres and his team received 20% of the SPAC's equity, or approximately 5 million shares, for an initial investment of only $2.5 million. At the peak price of $14.60, those shares were worth $73 million. Even after the crash, when the stock traded at $5.20 in June 2026, those sponsor shares were still worth $26 million. Torres had turned $2.5 million into $26 million while I watched my $22,000 shrink to $3,400. He didn't even need the merger to succeed. He needed it to close. That is the fundamental asymmetry of SPAC investing. Sponsors get rich on the transaction itself. Investors bear the consequences of the business actually performing. I zeroed in on that structure during a long conversation with my investment advisor in June and grasped that SPACs were rarely designed to make money for people like me. They were designed to generate fees for sponsors, underwriters, and lawyers.

what I did with the remaining shares

I sold everythin on July 3 at $1.55 per share. The total proceeds were $3,410. I had held the position for nine months and lost 84.5% of my original investment. I did not wait for a rebound because there was nothin to rebound toward. ModuSpace announced on June 28 that it had retained restructuring advisors and was exploring strategic alternatives, which is corporate code for preparing for bankruptcy. The factory in Tempe was reportedly operating at 30% capacity with fewer than 80 employees, down from 220 at the time of the merger. I took the $3,410 and moved it into a high-yield savings account earning 4.25% at Ally Bank. It read pathetic to deposit the remains of a $22,000 gamble into a savings account. It was the smartest financial decision I had made in months.

the HELOC I almost opened

During the worst of the SPAC decline in April, I had seriously weighed opening a HELOC against my Chicago condo to buy more shares at what I reckoned was a discounted price. My condo was appraised at $425,000 in January 2026 and I owed $287,000 on the mortgage. A lender had pre-approved me for a $65,000 line of credit at 8.4% APR. I had the application open on my laptop for three days. Thank God I didnt click submit. If I had borrowed $40,000 against my home to buy more of a collapsing SPAC stock, I would have lost the borrowed money an still owed the interest. The lesson was brutal but simple. Rarely borrow money to buy an individual stock. Rarely borrow against your home to chase a recovery that might rarely come. I closed the laptop and went for a walk along Lake Michigan. The water was gray and cold. It matched my mood.