Here’s another special purpose acquisition company (SPAC) stock, but this one is quite different from the others. It’s called SilverBox Engaged Merger (NASDAQ:SBEA), and it might provide an early-stage opportunity for investors.
Nov. 2 was an important day for SilverBox Engaged Merger. That’s when the company announced that it was merging with Black Rifle Coffee.
This could turn out to be one of the most notable SPAC mergers of the year. There was even a recent New York Times article entitled, “Can the Black Rifle Coffee Company Become the Starbucks of the Right?”
Maybe Black Rifle Coffee can succeed in its quest to become the conservative answer to Starbucks (NASDAQ:SBUX). If so, then those who invest in the stock could earn substantial returns in the long-term, regardless of their political leanings.
A Closer Look at SBEA Stock
It’s not unusual for pre-merger-announcement SPAC stocks to hover near $10 for awhile. Thus, it shouldn’t be too surprising that SBEA stock stayed close to $10 until its upcoming business combination with Black Rifle Coffee was announced on Nov. 2.
The stock zoomed to $15.75 on that day, but then it retreated. Unfortunately, folks who purchased the shares near $15 or $16 were served a cold cup of coffee over the next few trading sessions.
SBEA stock closed at $10.38 on Nov. 12, not very far from the pre-deal-announcement price. That’s not necessarily a bad thing, especially for those who haven’t taken a position in the stock yet. Perhaps it’s a chance to get in at a favorable price point if you’ve been sitting on the sidelines or if you’re just learning about Black Rifle Coffee today.
A Sympathy Play?
If you’ve been monitoring the financial news lately, then you may have heard about the upcoming merger of Digital World Acquisition (NASDAQ:DWAC), a SPAC, and Trump Media & Technology Group (TMTG).
Reportedly, TMTG will launch Truth Social, a conservative social-media platform that says it will emphasize First Amendment rights. Some commentators might view SBEA stock as a “sympathy play” that could follow DWAC stock, which recently rocketed higher.
And without a doubt, Black Rifle Coffee and TMTG have similarities, as they’re both politically conservative businesses which are going public through SPACs. Nevertheless, it’s important for informed investors to view Black Rifle Coffee as a distinct, unique company.
As a recent Wall Street Journal article explains, Black Rifle Coffee “sells pricier coffee and firearms-themed products such as its AK-47 Espresso Blend.” The company also sells branded apparel. Its target consumers include veterans and first responders.
Taking the Commitment Seriously
Moreover, Black Rifle Coffee has around 600 employees and roughly half of them are military veterans. Evan Hafer, a U.S. Army veteran, founded the company in 2014. Co-CEO Tom Davin Marine Corps was an infantry officer, and Executive Vice President Matt Best is a former CIA contractor.
Hafer asserted in a video that Black Rifle Coffee is owned by the “veteran community.” Plus, on the company’s website, Hafer asserts, “I started Black Rifle Coffee Company to provide a high-quality coffee to the pro-American and Veteran communities.”
It’s crystal clear that Hafer is taking his commitment to military veterans seriously. So Black Rifle Coffee doesn’t require its stakeholders to have any specific political proclivities.
The company can succeed by fostering brand loyalty. Instead of competing head-to-head with Starbucks for mainstream appeal, Black Rifle Coffee should be able to succeed as a niche business.
The Bottom Line
Is Black Rifle Coffee similar to TMTG? Sure, in some ways it is. However, these are two different companies, and Black Rifle Coffee will have its own loyal following.
As you surely can tell, this is a coffee company with a very unique flavor. So, irrespective of your political beliefs, I invite you to give SBEA stock a chance.
On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
