Money From CF Acquisition Stock Could Help Rumble Poach YouTube Viewers
Major social media platforms have long been dominant monopolies. But in recent years, there has been a growing number of people unhappy with these platforms. Many conservative-leaning people have felt censored by big tech.
This has created an opportunity for companies like To scoldwhich is expected to go public via a $2.1 billion SPAC merger with CF Acquisition Corp. (NASDAQ:CFVI). The Rumble platform markets itself as a neutral video platform and challenges the long-standing dominance of Youtube (NASDAQ:GOOGL).
To scold says it had 36 million average monthly users (MAUs) in the third quarter of 2021, compared to 1.6 million MAUS in the prior year period. It compares to YouTube’s 845 million MAUs on its mobile app alone. Yet, although Rumble is only a tiny fraction of YouTube’s size, the company has the potential to siphon off a large audience.
Market Opportunity for Free Speech Platform
A Research bench survey conducted in 2020 showed that nearly 75% of all American adults say social media sites intentionally censor political views they find objectionable. This belief that big tech and social media are “looking for them” was common among Republicans. At least 90% think social media censors political views.
The banning of prominent right-wing figures such as Alex Jones and Stephen Crowder only continues to fuel such speculation. Now, whether or not you think censorship doesn’t exist or that these people deserve to be removed is beside the point. Much of the American public thinks censorship is a problem. The problem is serious enough that even regulators in Republican-leaning states like Texas are embracing the regulations.
I believe that all of this angst against today’s mainstream big tech platforms such as Meta platform (NASDAQ:Facebook) Facebook, YouTube creates a market opportunity for a “conservative alternative”. This is advantageous for Rumble which presents itself as the platform of “freedom of expression”. Conservative figures could leap en masse to the platform, taking their large audience with them.
For example, Stephen Crowder has 5.6 million subscribers and 1.4 billion views. He is one shot away a permanent ban on YouTube after his second strike. The controversial comedian received a strike for violating the company’s hate speech policy. It may soon need a new home to host its content permanently and is using Rumble as an alternative.
If Rumble can convince a critical number of right-wing figures to jump ship for good, it could trigger a snowball effect in getting enough viewers to reach substantial scale.
The Trump partnership is just the beginning
As a key part of the company’s strategy to attract conservative figures, Rumble scored perhaps its biggest victory yet. To scold signed an agreement with former President Donald Trump Trump Media and Technology Groupalso planned to be listed via a SPAC agreement with Acquisition of the digital world (NASDAQ:DWAC). I wrote last month about the potential of the Trump-backed media venture, which I encourage you to read, but, in short, it’s clear to me that Trump still commands a lot of eyeballs.
As part of the deal, Rumble will host video services on the planned social media network TRUTH Social. According to Trump, Rumble will “serve as the essential backbone” of the planned website’s backend. This partnership is just the beginning. The challenge is to wean the audience from YouTube which is basically a monopoly in the space.
Content is king and having a substantial amount of preservative content in one place could be the catalyst needed.
Your takeaway meals
As with all SPACs, there are many risks that investors should be aware of. Currently, over 660 of these blank check companies are sitting with as many as $160 billion in funding raised and nowhere to put it.
These risks inherent in the SPAC process are the lack of disclosure, overly aggressive forecasts and mandates given to investors. SPAC shares tend to lose value after the hype wears off. In fact, a large number of old SPACs are now trading below the initial value of $10. Meanwhile, SEC Chairman Gary Gensler plans to crack down on loose practices in the coming months.
CFVI stock has also been volatile in recent days. This means that investors should have the chance to load this stock below current prices.
As with most SPACs, I believe that investors should wait for the de-spacing process finish before taking a stand. I like CFVI stock as a long term bet. It will be difficult to challenge the big established social media companies. However, Rumble has strong appeal in a niche that desperately needs alternatives.
As of the date of publication, Joseph Nograles held a LONG position in FB. The opinions expressed in this article are those of the author, subject to InvestorPlace.com Publication guidelines.