Black Rifle Coffee Aims to be the Next Big Controversial SPAC

All summer and fall, special purpose acquisition companies (SPACs) have been on the retreat. Back in February, it seemed any and all SPACs would shoot straight up after announcing a deal. Since then, however, SPACs have gone ice cold; the majority now slump under $10 after closing a deal. So what’s SilverBox Engaged Merger Corp. (NASDAQ:SBEA) stock’s approach to avoid getting caught in the SPAC crossfire?

An exterior of a Black Rifle Coffee Company (SBEA) store.
Source: YuniqueB /

Simply put, it’s going for controversy. You see, the one bright spot for SPACs recently was the one associated with former President Trump. Digital World Acquisition (NASDAQ:DWAC) shot up from $10 to more than $100 after announcing that it will be merging with Trump’s newly-formed media and social networking company.

Critics were quick to go after Digital World, pointing out the apparent deficiencies in the company’s business model and technology. However, it hasn’t really mattered to DWAC stock, which remains around $50 per share now. It’s clear that there is investor demand for investments in companies that appear to go against the mainstream media. There’s a significant interest in supporting the counterculture.

Here’s where SilverBox Engaged Merger enters the picture. It, seemingly having noticed the Digital World success, has announced plans to take over a right-wing coffee business. That’s right, coffee is now a political issue.

A Starbucks For Conservatives

Over the years, Starbucks (NASDAQ:SBUX) has gotten itself into a number of debates over cultural issues. Starbucks has taken stances on things such as concealed carry of weapons in its stores that have angered conservatives. Its donations and activism on issues such as LGTBQ+ inclusion has also ruffled some feathers.

Here’s where Black Rifle Coffee enters the mix. The company intends to be a Starbucks of the right. Black Rifle’s imagery is obviously centered around guns, which appeals to many potential customers and acts as a direct counterpoint to Starbucks’ well-known position on that issue. The company is based out of Utah, a state that is traditionally quite friendly to conservative values. Black Rifle has also earned positive word-of-mouth from conservative icons such as Donald Trump Jr. and Sean Hannity.

Black Rifle has used meme-based marketing to appeal to its ideological fanbase. The company ran advertising around the phrase “covfeve,” for example, which was a famous typo from President Trump’s Twitter account.

Is Political Affinity Sufficient Grounds For a Consumer Brand?

It’s not all been smooth sailing for Black Rifle, however. The company has sought to distance itself from certain people on the right. Black Rifle famously came out against Kyle Rittenhouse. Rittenhouse had worn Black Rifle merchandise and then got involved in fatal shootings in Kenosha, Wisconsin. At the time, the Black Rifle’s CEO estimated that the company had lost between 3,000 and 6,000 subscribers due to its disavowal of Rittenhouse.

This issue has resurfaced this past week. Following Rittenhouse’s recent exoneration, conservatives have launched a boycott campaign against Black Rifle in response to its handling of that matter.

This gets to a broader point. It’s hard to build a mass market product simply by appealing to people’s politics. Say what you will about Starbucks’ activism, but it’s found within great business model. Starbucks has excellent real estate, generally well-trained and polite employees, a solid product mix, and a great setting for hanging out and getting some work or meetings done.

Black Rifle, by contrast, has primarily only sold coffee online up to this point. That’s fine and good; there’s money in direct-to-consumer plays. However, it’s unlikely to support a large public company simply from selling some coffee beans online.

To that end, SBEA stock has started opening up physical stores, which it calls outposts. The company only has seven such locations open today, but it aims to get to 78 outposts over the next two years. That will be the true test of whether there is actually broad market demand for Black Rifle’s conservatively-tinged coffee.

SBEA Stock Verdict

It’s hard to get a read on the investment merits of this business. Up until now, Black Rifle has primarily been a direct-to-consumer coffee and merch selling operation. That’s fine as a small-scale business. But it won’t support the sort of lofty valuation that investors are likely hoping for.

So, it will be crucial to see how Black Rifle’s physical store locations work out. If their outposts can drum up business like Starbucks or Dutch Bros (NYSE:BROS), then SBEA stock is likely to be a long-term winner. If not, Black Rifle will remain more of a participant in the culture wars than anything worth owning in people’s investment portfolios.

For now, though, SBEA stock might be worth a gamble. After all, it’s right back to $10, meaning downside is limited until the SPAC deal closes. Meanwhile, if this deal ends up getting the same sort of attention as DWAC stock did, upside could be considerable.

On the date of publication, Ian Bezek 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 Publishing Guidelines.

Ian Bezek has written more than 1,000 articles for and Seeking Alpha. He also worked as a Junior Analyst for Kerrisdale Capital, a $300 million New York City-based hedge fund. You can reach him on Twitter at @irbezek.

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