CFVI stock: Is the CFVI share the next DWAC? Not so fast

Some interest in Acquisition of CF VI (NASDAQ:CFVI) may be related to the possibilities of its merger objective. But what is likely to cause a lot of vomiting around CFVI shares is its potential to become next Acquisition of the digital world (NASDAQ:DWAC).

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what I think? The digital world has skyrocketed after its plans to make public announcements of former President Trump’s social media. On the other hand, speculators began to take an interest in similar games. That is, special purpose mining companies or SPACs that publish right-wing companies.

CF Acquisition VI falls into this category, with this company with blank checks plans to merge with a video streaming platform Rumble. Considered an alternative to YouTube that cares for conservatives, it is very similar to the conservative social media platform (TRUTH Social) launched by the goal of merging DWAC. Despite the similarities, I would not count on doing a similar run as the one that triggered the “Trump stock” trend.

Of course, if we look at the performance of a similar game, we could still see a moderately high increase after the SPAC. This may make some people find short-term trading worthwhile. However, given its high valuation, you may not want it to be a long-term investment. He may not be able to maintain his valuation when the trend that made him popular fades.

Stock CFVI at a glance

Sponsored Cantor Fitzgerald, CF Acquisition VI appeared on the radars of many people in December when it first announced the Rumble deal. Since then, she has been on a moderately uneven toboggan ride.

With the news of the planned merger, CFVI shares naturally jumped. Rumors of Fr. Rumble’s partnership with Trump’s media business also helped. After this rise, things cooled slightly, although shares remained above the original SPAC price.

Rumors that popular podcast host Joe Rogan has joined Rumble gave another big boost in February. Unfortunately, when Rogan turned down Rumble’s $ 100 million offer to leave Spotify (NYSE:SPOT), the shares were withdrawn again. The shares continued to sell out, probably due to uncertainties putting pressure on the market.

But although a weakness has been observed recently, there is a possibility that it may return when the merger is completed by mid-year. This can make it a potential trading opportunity. Nevertheless, its advantages as a long-term investment opportunity at current prices are questionable.

A vague forecast for long-term performance

Could CFVI shares double when they close the Rumble deal, at about $ 11.50 per share? maybe. Using recent precedent, we may already have an idea of ​​how it will perform after the removal of SPAC. As you may have guessed, I’m talking about Black coffee rifle (NYSE:BRCC).

Formerly known as SPAC SilverBox Engaged Mergerhas completed the merger with a conservative response to Starbucks (NASDAQ:SBUX) 10 February. Between a few days before and about a week after the deal, the BRCC went parabolic, rising from $ 10 to as much as $ 22.80 per share. It has withdrawn since then, but remains 70% higher compared to its own original price of $ 10 per share.

Sounds good, right? Well, keep in mind that BRC may not be able to withstand this evaluation. As I argued last month, The black rifle is overrated, inflated with the phenomenon of “Trump shares”. Once this trend takes hold, it could fall to a much lower price. Another in line with the value of your business. Here I could see that the same is happening with CF Acquisition shares, which will soon be known as Rumble shares.

Based on the preliminary data presented in its presentation to investors, the company will have 261.4 million outstanding shares after the transaction. This gives it an implicit valuation of just under $ 3 billion. Although it may sound reasonable for a site with 39 million monthly active users (MAU) as a I’m looking for Alpha the commentator claimed last month monetization is still at an early stage.

It is still years away from possibly achieving average revenue per user (ARPU) numbers equal to YouTube. The platform may not reach billions in revenue in the end, as its investor hints are possible.

No need to rush before the Rumble Deal

Unless you plan to trade it before and after the SPAC merger is completed, you do not need to enter immediately. Even if you are in favor of Rumble’s future, to take market share from the original companies like YouTube.

As speculative madness over Trump-related stocks remains high, stocks can maintain a high valuation of the company for now, which in the nine months ended September 30, 2021, has just generated $ 7.1 million in revenue.

In a few months or a year, the shares we know today as CFVI shares could fall to single-digit prices if uncertainty over its monetization plans shows up again. Entering a position at such price levels is a better move for long-term investors than chasing it today.

On the day of publication Thomas Niel did not hold (directly or indirectly) any positions in the securities referred to in this Article. The opinions expressed in this article are those of the author and are the subject of InvestorPlace.com Guidelines for publication.