eToro, an Israeli rival to stock- and cryptocurrency-trading platform Robinhood Markets (HOOD), just had to cut its worth by more than 15% in a merger deal with a blank-check company. Given high valuations in the world of special-purpose acquisition companies, it’s to be expected some agreements will be recut.

Image: eToro.com

What’s surprising is that it isn’t happening more often.

Fintech Acquisition Corp V (FTCV), a SPAC backed by financial-services investor Betsy Cohen, agreed to merge with eToro back in March 2021, implying an equity valuation of $10.4 billion. In a rejigged deal, triggered by the failure to meet certain conditions by the end of last year, that’s now down to $8.8 billion.

U.S. SPAC issuance surged early in 2021, leaving hundreds of blank-check vehicles looking for targets. Nearly 200 transactions closed in the calendar year, according to SPAC Research data. Another 117 announced deals were awaiting completion at the end of the year. Meanwhile, 575 blank-check companies were still looking for their business combinations.

Though last year’s early frenzy slowed, the glut of buyers has brought eye-watering valuations for target companies, many based on rose-tinted projections of top-line growth.

eToro has a fast-growing business. Its projections last March anticipated that revenue would more than quadruple between 2020 and 2025. One downer, though, is the performance of Robinhood, which has halved in value since its initial public offering last July at a market capitalization of around $30 billion.

On paper, plenty of other SPAC deals look stretched, too. Yet despite the third and fourth quarters of 2021 beginning with at least 120 live blank-check transactions outstanding, in each period only three were recut and only six or seven abandoned, per SPAC Research data through Dec. 6. If stock markets lose their buoyancy in 2022, there could be more buyer’s remorse.

That said, there’s another reason deals don’t fail or even get reset very often. SPAC sponsors have huge incentives to close transactions, including big slugs of virtually free shares. And public SPAC shareholders can often make a quick profit by approving even a so-so deal, then swiftly moving on. That keeps deal hiccups rarer than they ought to be.