- CF Acquisition VI (NASDAQ: CFVI) stock is up 11% on news of the deal between Rumble and the Trump media interests
- CF Acq VI is the SPAC bringing Rumble to the market in the usual avoid the IPO route
- It’s possible that the CF Acq VI price jump is overdone
CF Acq VI is a SPAC – the blank shell of a company with cash and a listing – which is to bring the YouTube competitor Rumble to the stock market. That Rumble looks like a decent enough offering is why the SPAC is trading above the $10 price. That also means there are likely to be few redemptions when the deal is done. Shareholders in a SPAC have the ability to take their $10 a stock back and they tend to do so if the merger price is below $10 and not if it’s above.
What’s creating further excitement is that the Trump media interests – which are to go public through their own SPAC deal with Digital World Acquisition (NASDAQ: DWAC) – have selected Rumble to provide certain essential services like cloud and streaming capabilities.
What creates a trading opportunity here is that there are different views on how important this is. CF Acq VI has been up at $15 on the back of this idea, was at $11.26 yesterday and is now up that 11% premarket this morning.
The question is, well, how much value does the Trump brand bring at this second remove?
Worth walking back a little here. It’s always possible that the Trump media operations don’t really work in the sense of becoming a right wing, or MAGA, rival to Twitter, YouTube or even Facebook. Given the social divide in the US of course many hope they will be and so free of woke story selection and speech limitations. But it’s always possible this won’t work.
On the other hand, the base technology for a social media network is out there. The code’s available at GitHub, all in an open, public, format. The difficult thing to gain is the audience. Whatever one thinks of Trump himself there’s no doubt he’s got a following. So, a competently executed mixture of open source code and that Trumpist reason to use it could well work.
That would mean substantial business in turn for Rumble and might justify higher stock prices than now. Or, of course, failure of the idea will leave Rumble doing pretty much what it does now without the Trump boost and maybe that’s a fair valuation.
A useful guide to the short term of the CF Acq VI share price might be that the more there are stories and confirmations about Trump involvement then the more daily jumps and bursts we’re going to see. But as with this one which has already faded back from the initial 16% jump to this morning’s 11% greater consideration of the real benefits of such deals will lead to a lesser rise.
Given the political background here we might expect a connection between the CF Acq VI stock price and announcements concerning Trump. But how sticky any price changes are going to be is the unknown.