LIDR - CF Acquisition VI Is Another Loser Despite the Rumble Hullabaloo
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My editors have asked me to comment on CF Acquisition VI (NASDAQ:CFVI) stock.
I know very little about this special purpose acquisition company (SPAC) other than its another SPAC from Cantor Fitzgerald. Secondly, it’s merging with Rumble, the Toronto-based video streaming platform seedy enough to get into bed with Donald Trump.
In my past commentary about Digital World Acquisition (NASDAQ:DWAC), I’ve made no secret that I believe the former president is duping investors. He’s the last person I would recommend anyone get into business with. History shows he’ll rob you blind.
But for this article, I’ll save my venom for another time. In the meantime, the best way for me to assess the merits of CFVI is to look at Cantor Fitzgerald’s track record with SPACs.
I want to make sure you’re backing a winning horse.
CFVI Stock Part of a Series of SPACs
I’ve done a little searching to get all the information about Cantor Fitzgerald’s track record with SPACs. Here’s what I’ve found.
Cantor Fitzgerald-related SPAC performance (through March 10)CompanyAmount raisedMerger partnerMerger completedStock gains since mergerCF Finance Acquisition Corp.$250 millionGCM Grosvenor (NASDAQ:GCMG)November 20202%CF Finance Acquisition Corp. II$500 millionView (NASDAQ:VIEW)March 2021-85.3%CF Finance Acquisition Corp. III$200 millionAEye (NASDAQ:LIDR)August 2021-145.7%CF Acquisition Corp. IV (NASDAQ:CFIV)$450 millionNo merger announced N/A-2.1%CF Acquisition Corp. V250 millionSatellogic (NASDAQ:SATL)January 2022 -19%CF Acquisition Corp. VI$300 millionRumble Merger announced December 202114.3%CF Acquisition Corp. VII (NASDAQ:CFFS)$175 millionNo merger announcedN/A-1.1%CF Acquisition Corp. VIII (NASDAQ:CFFE)$225 millionNo merger announcedN/A0.9%Of the eight SPACs sponsored by Cantor Fitzgerald affiliates, four have found targets and have merged, while CFVI is in the middle of combining with Rumble. Three of its SPACs (IV, VII, and VIII), which have $850 million in cash to bring into potential mergers, have been shut out.
The worst part about Cantor Fitzgerald’s record is that the stocks of the four that have found merger partners are down an average of 62%.
Sure, CFVI is up 14.3% due to the Rumble news, but as InvestorPlace’s Thomas Niel recently wrote, “It’s years away from possibly reaching average revenue per user (ARPU) numbers on par with YouTube. The platform may ultimately fail to achieve billions in revenue, as its investor presentation hints is possible.”
My colleague argues that the only reason its share price trades above $10 at this point is because of the Trump-stock phenomenon. Once that goes away after Truth Social is a disastrous failure, Rumble will see a significant correction.
No Track Record to Boast About
Forget for a moment that Rumble had just $7.1 million in revenue for the nine months ended Sept. 30. Instead, focus on the fact Cantor Fitzgerald doesn’t seem to have a very good grasp of what makes a good SPAC.
But that’s OK. Most of the big players in finance who’ve gotten into the SPAC game have seen their egos badly bruised and beaten into a pulp.
In mid-February, BloombergQuint contributor Bailey Lipschultz pointed out that the De-SPAC Index, which tracks 25 SPACs that have completed a merger, is down 60% over the past year. In addition, the CNBC Post-SPAC Index is down 24% year-to-date through March 10.
Regardless of the potential you see for Rumble to become the next YouTube (and that’s isn’t happening), you’d be silly to ignore the red flags of Cantor Fitzgerald’s track record. It’s terrible.
It might want to go back to doing traditional deals because it’s raised $2.35 billion from investors with little to show for its efforts.
If you think it can’t get worse, it indeed can.
The Bottom Line
As a born-and-bred Torontonian, there is nothing more I’d like to see than a Canadian company (Rumble) succeeding south of the border, even if it caters to the fringe element.
However, I just don’t see Cantor Fitzgerald getting into the win column with Rumble and CFVI stock.
On the date of publication, Will Ashworth did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
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