Rumble Inc. (NASDAQ: RUM), a video-sharing platform, made headlines this week as its stock surged over 100% on December 23, reaching $14.30.
The rally comes on the back of a $775 million investment announcement from Tether, the issuer of the leading stablecoin USDT, marking Rumble’s highest close since September 2022.
As of press time, Rumble’s stock is trading at $13.30, reflecting a five-day gain of 63%. On a year-to-date basis, the stock has surged an impressive 206%, reflecting heightened investor interest.
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Tether’s $775 million investment on Rumble
The announcement revealed that Tether has agreed to purchase approximately 103.3 million shares of Rumble’s Class A Common Stock at $7.50 per share.
This transaction will generate gross proceeds of $775 million, significantly strengthening Rumble’s financial position, which already benefits from holding more cash than debt.
Rumble has outlined a clear plan for utilizing the funds. Of the total, $250 million will support growth initiatives aimed at enhancing platform engagement and monetization, while $525 million will finance a self-tender offer to repurchase up to 70 million shares of Class A Common Stock at the same $7.50 price offered to Tether.
This tender offer is designed to provide liquidity to stockholders and reinforce shareholder value.
“I truly believe Tether is the perfect partner that can put a rocket pack on the back of Rumble as we prepare for our next phase of growth.”- Chris Pavlovski, Rumble’s Chairman and CEO,
Interestingly, this agreement comes shortly after Rumble’s board approved allocating a portion of its cash reserves to Bitcoin (BTC), with plans to purchase up to $20 million in the cryptocurrency.
Revenue growth and user metrics
The recent surge in Rumble’s stock price has brought renewed attention to the company, which competes with major players like YouTube and Odysee. Rumble’s revenue has shown consistent growth, with the company reporting $25.06 million for the quarter ending September 30, 2024, a 39.34% year-over-year increase.
Over the past 12 months, Rumble’s revenue climbed to $85.65 million, up 6.36% compared to the prior year.
The platform’s global monthly active users (MAUs) have also increased, rising to an average of 67 million in Q3 2024 from 53 million in Q2 2024. However, the average revenue per user (ARPU) dropped to $0.33 in Q3 from $0.37 in the previous quarter, indicating room for improvement in monetization.
Analyst views and valuation concerns
Despite the excitement surrounding Tether’s investment, questions remain about Rumble’s valuation and growth prospects.
Oppenheimer analyst Jason Helfstein notes that while the $775 million equity investment strengthens Rumble’s balance sheet and alleviates liquidity concerns, the valuation appears ahead of its current advertising and subscription revenue performance.
Analysts, including Wedbush’s Scott Devitt, have revised their outlook on Rumble, raising the price target from $8 to $10 but maintaining a neutral stance on the stock.
While Tether’s $775 million investment is a major vote of confidence in Rumble’s potential, the company’s ability to sustain this momentum and deliver on its growth plans will be closely watched by investors.
Featured image from Shutterstock.
