- The big selloff with a higher-profile special-purpose acquisition company has kept CF Acquisition VI (CFVI) from bouncing back.
- Its merger target, online video platform Rumble, however, should be judged on its own success so far.
- If you’re confident that Rumble’s star will keep rising, you may want to buy CFVI stock before the deal closes.
Special-purpose acquisition companies (SPACs) are no longer trending on Wall Street, but CF Acquisition VI (NASDAQ:CFVI) is one that’s worth a closer look. CFVI stock has become one of the most-followed blank check companies out there. Mainly, due to the high profile nature of its target: online video platform Rumble.
With the reputation as a “politically neutral” version of Alphabet’s (NASDAQ:GOOG, NASDAQ:GOOGL) YouTube, Rumble has big potential. This is especially true as its ties to former President Donald Trump have raised its profile.
Rumble’s connections with Trump, and his own online media SPAC deal were the main driver of its big rally back in February. These connections have also played a role in its pull back in price since then. However, don’t base your decision to buy or not based on these connections. Instead, focus on its own success so far.
|CFVI||CF Acquisition VI||$11.76|
CFVI Stock at a Glance
This blank-check company’s choice in Rumble as its merger target, and Rumble’s ties to Trump, have been a major factor in its stock price performance. Not too long after the deal was announced, Rumble entered a partnership deal with Trump Media & Technology (TMTG). TMTG is the parent company of Trump’s social media TRUTH Social. As you likely know, TMTG intends to go public via a merger with SPAC Digital World Acquisition (NASDAQ:DWAC).
At first, this connection provided not much of a boost for CFVI stock. But during February, this similar play came along for the ride. During this time, it soared to as much as $18.52 per share. Unfortunately, the rising tide of Trump’s SPAC only helped it briefly.
Even as Digital World kept climbing, following the launch of Truth Social, excitement for CF Acquisition began to fade. Then, Digital World began to slump. This put more pressure on it. More recently, news of Elon Musk’s big move into social media has likely hurt its ability to bounce back.
Musk’s commitment to free speech is perceived to be a sign that demand for alternative platforms is about to dry up.
Why You Shouldn’t Judge Rumble Solely on Its Trump Ties
I won’t go into detail as to whether or not Elon Musk’s recent social media purchase means “game over” for Truth Social, but thinking that’s the verdict for Rumble is an overreaction. In fact, it has zero impact on Rumble’s prospects, and in turn, the long-term prospects of what is for now known as CFVI stock.
Why? Given the perception that YouTube engages in political censorship, Rumble will likely continue to report strong user growth and user engagement numbers. Just in the quarter ending March 31 alone, Monthly Active Users (MAUs) were up 22% quarter-over-quarter. The amount of content watched by users was up 23%.
Now, this company has yet to “cash the check” as it were. An early stage company, it’s still in the process of turning its surging user base into material amounts of revenue. However, per management’s projections, based on its current level of MAUs, getting to the billion dollar mark in terms of revenue appears attainable.
In short, don’t judge Rumble based on its ties to Truth Social. Instead, judge it on its success to date, plus its high potential to build on this success.
Bottom Line on CFVI Stock
Its pending merger deal (set to close later this year) not only means an opportunity for individual investors to grab a position in an up-and-coming online media platform.
This deal also provides Rumble with a large amount of cash proceeds. Among other things, the platform could use this platform to attract and retain more talent for its site. This, in turn, could enable it to move beyond just being the “conservative YouTube,” and become a formidable competitor to YouTube.
Currently earning a “B” rating in my Portfolio Grader, this is a risky play. It still needs to make the leap from building a massive audience, to turning this audience into material amounts of revenue. Any hiccups in taking this next step could mean volatility down the road.
Nevertheless, compared to its higher-profile counterpart, CFVI stock appears to be the stronger choice. If you’re confident Rumble’s star will continue to rise, you may want to consider it ahead of the merger close.
On the date of publication, Louis Navellier had a long position in GOOG. The InvestorPlace Research Staff member primarily responsible for this article did not hold (either directly or indirectly) any positions in the securities mentioned in this article.