PHUN - Is CFVI Stock the Next DWAC? The New 'Trump Trade' Rallies Ahead of Rumble SPAC Merger.
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As cases of the omicron variant continue to rise across the United States, stocks continue to fall across many sectors. This week began with almost every trending stock falling during premarket trading. Amid a sea of red, though, one green symbol stood out. The acquisition arm of financial services firm Cantor Fitzgerald, CF Acquisition Corp. VI (NASDAQ:CFVI) has been making headlines since last week, when it announced plans to merge with Canadian video-sharing service Rumble. Indeed, Rumble is a company known for its ties to controversial, and often conservative, political figures. Most noteworthy of this group is former President Donald Trump. The former president has been a member since June 2021, and his affiliation is certainly helping CFVI stock rise today.
What’s Happening With CFVI Stock
Since it began rising last week, CFVI stock has drawn comparisons to Digital World Acquisition Corp (NASDAQ:DWAC). Naturally, DWAC stock became an overnight market sensation when it shot to historic heights overnight following the news it would serve as the special purpose acquisition company (SPAC) partner for Trump’s new media venture.
While both have been labeled “Trump trades,” only one is rising this morning. CFVI is up by more than 13% within the first two hours of trading, while DWAC has fallen by almost 5%. Despite coming down a little from its spike within the first hour, CFVI is still up by more than 38% for the week. And while DWAC is in the green for the same period, its gains are less than 3%. Although DWAC rose today in premarket trading, as Wall Street’s opening bells sounded, it began to fall and hasn’t stopped since.
Why It Matters
As it turns out, the two companies are directly connected. Cantor Fitzgerald CEO Howard Lutnick recently told Bloomberg that he could confirm that The Trump Media Group and DWAC SPAC were utilizing Rumble for its distribution services. Yahoo Finance reports that the video-sharing service was being paid by Trump’s group on a non-exclusive basis.
With this in mind, it makes sense that CFVI stock would be moving as it is. Since DWAC’s rise alerted Wall Street to Trump’s power as a market mover, investors have been keenly searching for the next stock with ties to him. Some speculation has risen that software developer Phunware (NASDAQ:PHUN), the company that helped power Trump’s last campaign, would be the next breakout Trump trade. However, that hasn’t happened so far, and PHUN is not trading well today nor did it during the previous week. The focus has been on CFVI, which is already rising after a downtick this morning.
There is one key difference between CFVI and DWAC to note, though. As high as it shot up during its breakout, DWAC still has nothing to offer investors until the 2022 launch of Truth Social, Trump’s social media platform, which is still in development. Rumble, on the other hand, is a fully functioning company that sees new videos uploaded often. Additionally, according to recent reports, the platform saw viewer engagement increase by 44X from Q2 2020 to Q3 2021. While investors wait for news on Truth Social, they can watch Rumble’s numbers increase, particularly as news of the recent SPAC merger has given the company considerable media coverage.
What It Means
The Trump trades have been a fascinating phenomenon to watch play out, and they are far from over. 2022 will bring the launch of Truth Social and more campaign rallies from Trump, which are likely to spur growth for both stocks.
There’s still the possibility that CFVI stock will fizzle out as DWAC did. But investors should also remember that since CFVI didn’t shoot up in the same unprecedented way that DWAC did, it also may not fall by as much. The stock is certainly worth watching as 2022 market momentum continues to mount.
On the date of publication, Samuel O’Brient 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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