CF Acquisition Corp. Can Deliver Solid Returns as Rumble Merger Approaches

  • CF Acquisition Corp. (CFVI) stock will pop as we get nearer to the merger date between the SPAC and Rumble, a conservative-leaning social media platform.
  • If Rumble manages to get a small slice of YouTube viewership in the long run, it will do very well.
  • The company is growing rapidly and now has 44 million monthly visitors.
The Rumble (CFVI) platform displayed on a smartphone screen.

Source: Tada Images / Shutterstock.com

CF Acquisition Corp. (NASDAQ:CFVI) stock has gained almost 16% in the past six months, a decent return, but nothing to write home about. Investors usually expect more from mega special purpose acquisition company (SPAC) stocks.

CF Acquisition is expected to merge with Rumble, a conservative-leaning social media platform focused on streaming video. It has an initial enterprise value of $2.1 billion. Rumble’s deal with the company is scheduled to close in the second quarter (Q2) and will provide about $400 million in proceeds to Rumble to fund its growth.

When the deal is closed, Chris Pavlovski, who founded the company and is its chief executive officer, will retain voting control.

YouTube and Meta Platform’s (NASDAQ:FB) Facebook are both services that use algorithms to decide what content is trending. However, Pavlovski says Rumble uses a much more human-driven approach and says they use very few algorithms.

The market is certainly there for the company. According to a 2020 poll from Pew Research Center, most Americans believe that social media companies censor political views. Republicans are more likely than Democrats to think that major tech corporations may present liberal ideas over conservative ones.

Tech entrepreneur Chris Pavlovski founded Rumble in 2013. The company has come a long way. In 2022, according to Similarweb, Rumble now gets 44 million monthly visitors.

Rumble has some promise to provide an alternative way to watch videos, but it is still a work in progress. It has a lot of improvement potential and will likely have rewards for shareholders over time. In the short run, CFVI will remain a volatile stock. Therefore, it is important to time your exits and entries carefully.

CFVI CF Acquisition Corp. $11.27

Rumble is Growing Rapidly

In the past, Rumble was a company that could not compete with the other household brands in the streaming industry. However, Rumble has started to carve out a bigger spot for itself in recent years.

Part of that has to do with the company’s association with conservative politicians and media figures, most notably former President Donald Trump. When he started posting videos on the platform, it generated a healthy number of views, leading to more pundits from the right-leaning and libertarian viewpoints on the platform. Rumble saw a sharp spike in users from 1.6 million to 36 million in one year from Q3’20 to Q3’21, a 2,150% jump.

Some prominent names on Rumble include Fox News personality Dan Bongino, Donald Trump, Jr., and Matt Gaetz, a Republican politician from Florida. He has been close to former President Trump. In addition, Glenn Greenwald, Tulsi Gabbard, Bridget Phetasy, and Matt Orfalea are also on the outlet.

Rumble’s main competition is YouTube, which has 2.3 billion users worldwide as of 2021 and generated $28.8 billion in revenue last year. That gives us an average revenue per user (ARPU) of $12.52. In comparison, the estimated U.S. monthly ARPU stands at $5.28.

YouTube is a large brand and understandably, it is valuable to advertisers. As time goes on, Rumble will be able to bridge this gap. However, considering the $5.28 rate, that will give the company estimated revenue of $2.79 billion, which is not too shabby for a developing company.

How to Play CFVI in the Short-Term

Usually, a SPAC stock does well in the run-up to a reverse merger. However, investors are on edge because of current geopolitical tensions due to the Russia’s invasion of Ukraine. Therefore, there is a feeling that speculators will not make massive gains in this one beyond the fruits they have already enjoyed in the case of CFVI stock.

Saying something definite in the SPAC space comes with its issues. Much like the meme space, it is tough to predict because a positive press release can have a massive effect on the share price. In addition, Rumble has a close association with former President Trump. Therefore, that comes with its own set of pros and cons.

As it nears its merger date, several near-term catalysts will pop the price; most notably, the day that shares start trading. It would help if you looked to trim your holdings around that time. Beyond that, Rumble has an interesting business model that has the potential to morph into something powerful.

Is CFVI Stock a Buy?

During the last few months, there has been a lot of speculation regarding Digital World Acquisition Corp. (NASDAQ:DWAC) and CFVI. These blank check companies will be two of the most controversial yet well-known right-leaning brands in the public markets. These names generate significant interest because they cater to an alienated audience. Rumble has the better chance of making a profit between the two.

Trump’s TMTG is a social media platform that has some interesting aspects. However, it is too early to know how successful this endeavor will be.

In comparison, Rumble has been around for a while. It also has community guidelines and a content moderation policy, ensuring content creators do not go too overboard on their posts.

Invest in CFVI stock to enjoy gains from the short-term catalysts. But wait for the stock to drop closer to the floor price of $10 before buying in.

On the publication date, Faizan Farooque 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.

Faizan Farooque is a contributing author for InvestorPlace.com and numerous other financial sites. Faizan has several years of experience in analyzing the stock market and was a former data journalist at S&P Global Market Intelligence. His passion is to help the average investor make more informed decisions regarding their portfolio.


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