On Monday, Rumble, Inc. (NASDAQ: RUM) maintained its Perform rating from Oppenheimer following a significant funding announcement made on Friday. The video platform company revealed a $775 million equity investment from stablecoin operator Tether.
According to InvestingPro data, Rumble's strong financial position is evidenced by its current ratio of 3.94x, with liquid assets well exceeding short-term obligations. Rumble has agreed to issue $250 million worth of new shares at $7.50 each to facilitate growth capital. This strategic move allows insiders to diversify their holdings effectively without impacting the share price.
The investment is seen as a positive step for Rumble, selling primary shares at what is considered an attractive valuation to strengthen its balance sheet. While the stock has experienced a significant -16.78% decline over the past week, it maintains impressive YTD returns of 60.13%.
This decision is expected to ease concerns about the company's liquidity as it moves towards generating positive free cash flow. Additionally, Rumble's recent plan to acquire less than $20 million in Bitcoin is anticipated to increase interest in cryptocurrency-related content and advertising on its platform.
Although the possibility of a future collaboration between Tether and Rumble on a third-party cloud offering exists, no official announcements have been made regarding such a partnership as part of this investment. Oppenheimer's stance on maintaining the Perform rating is influenced by Rumble's valuation, which is currently at 27 times its forecasted 2025 sales, compared to peers like Pinterest (NYSE:PINS) and Snap, which trade at approximately 4 times their sales.
InvestingPro analysis reveals that Rumble is currently trading near its Fair Value, with additional insights available in the comprehensive Pro Research Report, which offers detailed valuation metrics and peer comparisons for over 1,400 US stocks.
The investment by Tether in Rumble does not indicate a significant change in the latter's business strategy. It represents a financial vote of confidence in Rumble's potential and its appeal to investors interested in the convergence of digital media and cryptocurrency markets.
The Perform rating suggests that while the investment is noteworthy, Oppenheimer advises investors to observe Rumble's progress in enhancing its advertising and subscription sales before re-evaluating its position.
In other recent news, Rumble Inc. has reported notable developments. The company announced a significant increase in its Q3 2024 earnings, with revenues rising to $25.1 million, marking a $7.1 million increase from the same period last year. Despite a slight decrease in average revenue per user, the company observed an increase in monthly active users to 67 million. Rumble Inc.'s adjusted EBITDA loss improved to $23.5 million, with a decrease in cash commitments for programming and content agreements.
In terms of board changes, Rumble Inc. reported the immediate resignation of David Sacks from its Board of Directors. The company has not indicated any immediate plans for a replacement. However, Rumble Inc. also announced the appointment of Jerry Naumoff as an independent director to its Board. Naumoff will serve on the Audit Committee and will be compensated in line with the company's standard program for non-employee directors.
These are recent developments that follow Rumble Inc.'s focus on monetization strategies for 2024, including brand partnerships and the ongoing development of Rumble Ad Center.
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