Chamath Palihapitiya's four blockbuster merger with SPAC is down 32% this year

Investors who bought Chamath Palihapitiya earlier this year are probably regretting their decision right now.

Palihapitiya, a technology investor and former Facebook executive, was named SPAC King for his full support of specialist acquisition companies and his many deals.

When Richard Branson's Virgin Galactic went public in 2019 with the SPAC merger through his venture capital fund Social Capital, it raised the profile of the system.

But his four mergers with Social Capital SPAC - Clover Health , Opendoor, SoFi and Virgin Galactic - have fallen in value by an average of 32% this year due to air leaks from certain parts of the market.

Their results sum up the trading in 2021. Markets were frothy at the start of the year as investors flooded by central bank money boosted the value of SPACs . Loss-making tech stocks also got a boost as they hunted for the next Amazon or Tesla.

But that froth faded as valuations became doubtful in the face of strong inflation and less central bank support . Star stock pickers such as Katie Wood of Ark Invest have had a tough time as many technology bets have faltered.

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SPAC is a front company listed on the stock exchange with the intention of finding a merger target. They provide private companies that want to go public with a less expensive and quicker alternative to a traditional IPO.

From the beginning of the year to date, the tone of Social Capital's merger with SPAC has been bleak. Shares in Clover Health were down 76% as of late Tuesday, while Virgin Galactic shares were down 38%. Property website Opendoor is down 35%.

One bright spot is financial services company SoFi, which is up 20%, although its merger is not until mid-2021.

"Given how easy it has been to get equity funding, it's not surprising that many Chamath companies are struggling to get close to where they were trading a year ago," Edward Moya, senior market analyst at trading platform Oanda, told Insider.

SPACs were the biggest craze on Wall Street in early 2021 and are still generating billions of dollars a month.

Right now, investment firm Social Capital Palihapitiya has six SPACs in the market looking for targets. All are down for the year and four are trading below their IPO price of $10 amid a general exclusion from empty mergers .

Critics point out that SPACs are good for initial backers such as Palihapitiya, which can get most of the final company for a small early investment. But for later investors, they are much less profitable.

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