Capitalizing on Values: The Rise of Conservative-Driven SPAC Deals
by Marlena Haddad on 2024-01-23 at 9:46am

Over the last few years, a discernible trend has emerged as a select group of SPACs have set their focus on combining with conservative and “patriotic” targets, which have generated retail traction like few other sectors since early in the last SPAC cycle.

As we head further into the current election year, we are already seeing conservative-tied SPACs benefit significantly from political events such as former President Donald Trump’s victory in the Iowa Caucus last Monday and Florida Gov. Ron Desantis’s withdrawal from the presidential race on Sunday.

Among these are Rumble (NASDAQ:RUM), Digital World (NASDAQ:DWAC), PublicSq (NYSE:PSQH), Colombier II (NYSE: CLBR.U), and Black Rifle Coffee (NYSE:BRCC). 

CF Acquisition Corp. VI kicked off the trend with its December 2021 merger with Rumble, considered a conservative alternative to YouTube. Despite Rumble facing a SEC regulatory probe, it has the chance to gain event-driven boosts through the Republican presidential primaries. Following Trump’s victory in Iowa, Rumble’s shares saw a 16% gain last Tuesday, reaching $4.

Rumble surged further by 36% in trading yesterday after a recent collaboration announcement with Barstool Sports and DeSantis’s withdrawal from the presidential race. The company has seen a 25% bump since the beginning of 2024.

In a similar vein to Rumble, Digital World’s shares jumped after Trump’s victory in Iowa. The SPAC, which is still working to complete its combination with Trump Media & Technology Group, experienced a 29% rise in last Tuesday’s trading session following Trump’s win.

Continuing to ride the momentum of its recent success, the SPAC rallied by 88%, buoyed by the DeSantis headlines and his endorsement of Trump. DWAC reached a high of $50.20 yesterday, marking its best day since 2022, and closed at $49.69. Year-to-date, the SPAC has already seen a gain of almost 185%.

The transaction, originally announced in December 2021, is now the oldest pending announced deal in the SPAC market and Digital World has until March 8 to complete its deal with TMTG. However, it can further extend this deadline to September 7.

Colombier 1, spearheaded by Omeed Malik, combined forces with values-based marketplace Public Sq in July 2023, which aims to create a conservative alternative to e-commerce giant Amazon (NASDAQ:AMZN). PSQH also enjoyed a notable bump, up nearly 25% to $6.34 in Monday trading. 

Malik looks to repeat the trick with Colombier II, which priced its upsized $150 million IPO in November 2023. The SPAC intends to focus on businesses aligned with conservative values, categorized by Entrepreneurship, Innovation, and Growth (EIG). This includes parallel economies, made-in-US products and services, and sectors impacted by certain investor mandates.

Black Rifle Coffee, which has sometimes been called the Starbucks of the right, completed its combination with SilverBox I in February 2022. Similar to its peers focused on conservative values, BRCC also rallied on the news yesterday, up around 14% to $4.10.

Branding itself as a consumer lifestyle company crafted by and for military veterans, BRCC has cultivated a robust presence among politically conservative users and on social media platforms.

Though Digital World has picked up the most momentum since Iowa, all four stocks have seen bumps that bucked their recent trajectory. Since the beginning of this year, DWAC, PSQH, and RUM have each experienced noteworthy gains, while BRCC trails behind the group, witnessing a year-to-date decline of -2.61%.

As we approach further into the election year, it becomes apparent that conservative-related SPACs are gaining momentum. And, as the election year unfolds,  conservative-related SPACs could present an investment opportunity for those looking to navigate the dynamic market influenced by political dynamics.

But, the market can also be fickle. Outside of Rumble’s new deal with Barstool, none of this quartet of companies has announced any substantive news during this period they have experienced major rises. It also remains to be seen what kind of intrinsic value a Trump nomination on the Republican ticket and eventual win would bring each of these companies.

So, the rise in their stock price is based mostly the on traders hoping to be on the right side of momentary excitement. That can ebb and flow, but, if attention on the presidential race keeps providing boosts, there are a number of upcoming dates in the US political calendar that traders could be zeroing in on as opportunities.

Upcoming Events in US elections:

January 23- New Hampshire primary

February 8- Nevada Republican caucus

February 24- South Carolina Republican primary

February 27- Michigan primary

March 5- Super Tuesday

March 12- Primaries in Georgia, Mississippi, and Washington. Republicans in Hawaii hold caucuses

March 19- Primaries in Arizona, Florida, Illinois, Kansas and Ohio

April 2- Wisconsin primary

July 15-18- Republican National Convention in Milwaukee, Wisconsin

September 16-First presidential debate in San Marcos, Texas

September 25- Vice-presidential debate in Easton, Pennsylvania

October 1- Presidential debate in Petersburg, Virginia

October 9- Presidential debate in Salt Lake City, Utah

November 5- Election Day

 

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