Here's Chamath Palihapitiya's unsympathetic response to complaint about SPAC losses

By Steve Goldstein

Tax-loss generator Chamath Palihapitiya

Chamath Palihapitiya's career in finance has been marked by his success as a venture-capital investor, and his failure to produce profitable investment vehicles for retail investors.

It's the latter that once again drew social-media criticism as Palihapitiya discussed his time at Social Capital, the firm that launched so many of what are called special purpose acquisition companies that he became known as the SPAC king.

That venture was profitable for Palihapitiya but not for investors, who lost billions of dollars. Some of those SPACs are still trading today - like Virgin Galactic (SPCE), Opendoor Technologies (OPEN) and his only major success, MP Materials (MP) - while others have gone bankrupt or been acquired, like Proterra.

Palihapitiya on Wednesday blamed several factors for his difficulties at Social Capital - a divorce, partners who he said made the firm a "political snake pit," and what he said were "suboptimal" portfolio decisions that didn't match his investment style.

"I'm in a much better place now personally and professionally. We invest only my capital and so far, so good," said the co-host of the popular All-In podcast, in a post on X.

That didn't draw much sympathy. "You're a criminal. You always have been," said one user. "Not according to your mom," was Palihapitiya's reply.

But the response that drew howls was to someone who said he had invested in all of Palihapitiya's SPACs. The pitches were compelling, said this person. "Then I lost tons. You made tons," he added.

To which Palihapitiya replied: "Then you generated capital losses. Did you use those yet??"

It is true that losses on investments can be used to offset income for tax purposes, by up to $3,000 per year under U.S. tax rules, indefinitely until the losses run out. At the top tax rate of 37%, that's worth $1,100 per year.

He's not the first investor to cite tax losses generated from poor investments as a feature - Cathie Wood of ARK Invest did so as well, in a post she subsequently deleted in 2024.

-Steve Goldstein

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03-05-26 0506ET