Medha Singh and Bansari Mayur Kadar

(Reuters) Several businesses, such as Grab Holdings or BuzzFeed that merged with shell companies to become public, have lost shares, as investors pulled the rug from underneath the stock hyped by Wall Street’s frenzied blank check deals.

BuzzFeed shares, which were merged with 890 5th Avenue Partners blank-check company, plunge 40% in the four years since Dec. 6, their launch. Digital media firm BuzzFeed raised $16million out of $288,000,000 in trust funds. 94% investors returned the money.

Grab Holdings has seen its market cap drop by half since Dec. 2, when it made its Nasdaq debut. This was following Grab Holdings’ record-breaking merger with a blank check firm.

Edward Moya is a senior analyst with Oanda. He stated that investors now look more towards companies that have proven track record and have a history of producing profit. “The frenzy driving some momentum in SPACs earlier in the year is clearly over,” said Edward Moya, senior market analyst at Oanda.

SPACs are shell companies which raise capital in an initial public offer (IPO). They then put that money into a trust to be used for merging with a private firm and making it public.

SPACs can often give investors incentives to place their initial investments in trust, since they aren’t aware of the target company before an IPO.

Dealogic data showed that the average redemption rate increased more than twice to 58% during the fourth quarter compared with a year ago. This is a result of many businesses falling short of investor expectations.

In the case of Zoom Video Communications-backed event management software company Cvent, nearly 85% of investors redeemed their shares for cash two days before its debut, its filing showed.

Vacasa Vacation Rental Management Company received gross proceeds in excess of $340 Million from its December 8th debut. However, this figure is 145 million lower than it expected because it was redeemed.

Vacasa’s business has been well capitalized through the SPAC agreement, as more than half of its cash was retained in trust accounts. CEO Jamie Cohen stated to Reuters.

In February, SPACS became so popular that investors began to view them as meme stocks. “Then Lucid crashed, and the SEC started issuing negative comments. SPACs began to fall out of favor,” stated Matthew Tuttle chief executive officer at Tuttle Capital Management LLC.

Last week, U.S. regulators stated that they are considering tightening regulations regarding how SPAC sponsors, directors, and underwriters structure fees, make projections, and disclose conflicts.

Vanda (NASDAQ) Research has found that SPACs account for a significant decline in the participation of retail investors.

De-SPAC’s index tracks 25 companies that have successfully completed blank-check mergers. It is currently down 43% after reaching an all-time high of mid-February.

However, merging with firms that are not checked is still an option. Renaissance Capital reported in its annual review 2021 as a record-breaking Year, when 604 SPACs raised $144 Billion. However, only 62% were raised during the first quarter of 2018.

Grab and BuzzFeed did not comment. Cvent, however, didn’t respond to a Reuters inquiry for comment.