CF Acquisition (NASDAQ: CFVI) is up 21% premarket on the back of a 12% rise Friday. This is a result of talk about a link-up with Donald Trump and his media interests.
CF Acquisition Corp VI – clearly, a SPAC or special acquisition vehicle – announced a merger with Rumble, the video site, earlier last week. As that’s what SPACs are set up to do, they’re a financed but empty shell on the market designed to then merge with an extant business, this didn’t really change the stock price all that much.
Since Friday there’s been the – possible – news that Rumble might have a tie-up with Donald Trump in the works. As is well known Trump has new media ambitions possibly largely driven by his removal from most of the extant ones.
The trading opportunity is whether this, or anything related, is going to actually happen.
The first possibility is that not much of anything does. At which point we’d expect the price to move back down to what it was when the SPAC merger was merely with Rumble.
A second is that some sort of attempt to link up with Trump does happen, in which case we’d likely see decent rises again in the CF Acquisition stock price. For while Trump did indeed lose the election he’s still got a significant support base in the country. More, there’s within that base a significant feeling that they’re not getting a fair shake in the media.
Note that whether this is true or not doesn’t matter, belief is what moves markets.
For there’s then that third possibility, which is that Rumble and Trump do come to some decent deal, they launch, then the CF Acquisition stock price could really soar. For what a social media network – of any kind, something based upon Mastodon as Trump has already tried to launch, or something video-related like Rumble – is a reason for people to join. What is it that will create that audience?
Whatever anyone thinks of Trump that significant portion of the population thinking they’re being ignored is exactly that thing. In Hollywood parlance, Trump would be able to greenlight a social media system. Just that he is involved will gain it publicity and membership. Both of which are the really hard things to gain these days – the basic technology is available at GitHub.
What will actually happen isn’t quite the point. It is beliefs about what will – or even might – that will drive the CF Acquisition stock price for the near future. Significant announcements either way – there will be a Trump deal, there won’t be – will shift the price by tens of percentage points. Actual evidence of a successful launch and the arrival of the Trump audience might well make it soar.
CF Acquisition VI is going to be a volatile stock until the uncertainty is resolved. As we all know, volatility is the very thing that trading is made of. One to think carefully about.
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Tim Worstall is a freelance writer specialising in economics and the financial markets.