Rumble Inc (RUM, Financial) experienced a significant stock price movement due to the announcement of a $775 million investment from Tether (USDT). This investment contributed to a sharp 85.54% surge in Rumble's stock price, which is currently valued at $13.34.
The substantial investment by Tether comes at a crucial time for Rumble, which has been grappling with operational losses. Through the first three quarters of 2024, Rumble reported losses nearing $102 million, hampered by a negative gross margin of 59%. This indicates that the costs of providing Rumble's services exceed its revenue, impacting its operational financial health.
At the close of Q3 2024, Rumble had $131 million in cash and equivalents. The new investment from Tether is a strategic move that enhances Rumble's financial capacity, providing the company with better financial flexibility. Of the $775 million, $250 million is allocated for business needs, with $500 million earmarked for stock purchases at $7.50 per share from willing sellers. However, with the current stock price above $7.50, shareholders are unlikely to sell, allowing Rumble to retain the $250 million to fuel its growth and extend its operational runway by a few more years.
Despite the positive investment news, Rumble's financial ratios indicate areas of concern. The Piotroski F-Score, which stands at 2, suggests poor business operation. The company also reported a tangible book value of just $0.45 per share and a negative earnings per share (EPS) of -$0.64 in the trailing twelve months. Additionally, Rumble has been showing strong financial strength, as reflected by a strong Altman Z-score of 21.36, indicating a low bankruptcy risk.
Investors should be aware of the volatility involved, with the stock showcasing a high beta of 0 and a volatility rate of 68.22. Despite the current promising outlook due to the investment, Rumble's GF Value assessment indicates that the stock cannot be properly evaluated currently. For more detailed analysis, refer to Rumble's GF Value page.
Rumble operates in the Technology sector, specifically in the Software - Application industry, and faces competition from firms like Shopify (SHOP), Uber (UBER), and Salesforce (CRM). Given the recent developments, investors should closely monitor Rumble's financial performance in the coming quarters to determine the long-term viability of its business model and investment attractiveness.
