CF Acquisition Corp VI (CFVI), the SPAC that's taking YouTube competitor Rumble public, is trading sharply higher in the premarket on Dec. 15 after former President Donald Trump’s social media company confirmed a deal with Rumble. Should you invest in CFVI stock after the announcement and what’s the long-term forecast for Rumble?
Incidentally, Trump’s social media company is going public through a reverse merger with Digital World Acquisition (DWAC). Black Rifle, another popular company among conservatives, is also going public through a reverse merger with SilverBox Engaged Merger Corp. I (SBEA).
The SPACs merging with conservative companies are outperforming.
In a world where SPACs are finding it hard to trade above the IPO price, the performance of blank-check companies merging with conservative companies stands out. DWAC has been the top performer and trades at a massive premium over the IPO price. Despite the recent correction, CFVI and SBEA are also trading above the IPO price.
What does the Rumble-Trump Social Media deal entail?
Amid rumors of a deal between Rumble and TMTG (Trump Media & Technology Group), TMTG has confirmed that it has partnered with Rumble to deliver video and streaming for Truth Social, which is Trump's yet-to-be-launched social media platform. The two companies are also in talks for Rumble to provide infrastructure and video delivery services for TMTG+, which is the subscription video-on-demand service from TMTG.
Commenting on the deal, Trump said “I have selected the Rumble Cloud to serve as a critical backbone for TMTG infrastructure” as part of the company’s mission to “align with service providers who do not discriminate against political ideology.”
Rumble severed ties with Unruly Group and Tremor International.
Meanwhile, in a related development, Rumble severed all business ties with Unruly Group and Tremor International and accused them of censoring right-wing political commentator Dan Bongino.
Should you invest in Rumble social media stock?
Companies like Rumble and TMTG are a play on the alleged monopoly of Big Tech. Conservatives have long believed that Big Tech and social media companies are biased against them. Trump’s frequent barbs against Big Tech also fuel the anger among his followers.
The deal with CFVI valued Rumble at an initial enterprise value of $2.1 billion. The company fancies itself as the YouTube of conservatives and is positioning itself as the champion of free speech.
There's a massive market opportunity for companies like Rumble and TMTG. They have their target market well sorted. All they need to do is to come up with an appealing proposition, and in Rumble’s case, monetize the user base. Given the massive market opportunity and the growing anger against Big Tech among conservatives, it might make sense to invest in Rumble social media stock by buying CFVI.
The merger hasn't been confirmed yet. However, going by the strength in CFVI's stock price, the merger should sail through. Incidentally, in TMTG’s case, its merger with DWAC is being scrutinized by the SEC on allegations of hiding material facts from investors.
As for the Rumble-CFVI deal, while it was short on the financial projections, unlike other SPAC mergers that provide projections for up to a decade, it did make a pertinent point and said in the presentation that it has “just scratched the surface.”