Quick Take
- Tether, the world’s largest stablecoin issuer, has made a $775 million “strategic investment” in video-sharing platform Rumble.
- The move underscores Tether’s growing focus on sectors like decentralized communication, AI, and Bitcoin mining.
- Rumble plans to use $250 million of the funds for growth initiatives and allocate the rest to a self-tender offer for Class A common stock.
Tether (USDT), the dominant player in the stablecoin market, has made a significant investment in Rumble, a YouTube-alternative platform popular with a right-leaning audience. According to Reuters, Tether’s $775 million injection comes as Rumble strengthens its ties with the cryptocurrency industry, following its announcement last month to allocate up to $20 million of excess cash reserves to Bitcoin.
Rumble Stock Reacts to Investment News
The investment caused a surge in Rumble’s stock price, which had been steadily declining due to Federal Reserve interest rate hikes. After closing 1% lower on Friday, the stock skyrocketed by as much as 44.6% in aftermarket trading, as reported by Yahoo Finance.
Tether’s Expanding Portfolio
Tether has seen its profits soar amid rising interest rates, generating $2.5 billion in net profit during Q3 2024 alone. Under the leadership of CEO Paolo Ardiono, who was recently promoted, Tether has broadened its investments into emerging sectors, including artificial intelligence, Bitcoin mining, and decentralized messaging.
This investment aligns with Ardiono’s interest in censorship-resistant technologies. Notably, Tether’s skunkworks division has been developing Keet, a peer-to-peer chat and video conferencing app built on technologies created by Ardiono’s other company, Holepunch.
Rumble’s Plans for the Investment
Rumble plans to allocate $250 million from Tether’s investment to drive growth initiatives. The remaining funds will support a self-tender offer for up to 70 million shares of its Class A common stock at $7.50 per share, which is also the price of Tether’s investment. As part of the deal, Tether will acquire 103,333,333 shares, while Rumble’s chairman and CEO, Chris Pavlovski, will retain his controlling stake in the company. Pavlovski stated he would sell no more than 10 million of his shares.
“Many people may not realize the incredibly strong connection between the cryptocurrency and free speech communities, which is rooted in a passion for freedom, transparency, and decentralization,” Pavlovski said in a statement, emphasizing the partnership’s alignment with Rumble’s mission.
Rumble’s Financial Snapshot
In Q3 2024, Rumble reported $25.1 million in revenue, a 39% increase year-over-year. Despite the growth, the company posted a net loss of $31.5 million, slightly higher than its $29 million loss in Q3 2023. Rumble boasts 67 million average monthly active users and hosts Truth Social, a platform tied to conservative audiences. Early investors in Rumble include Peter Thiel, Vivek Ramaswamy, and Vice President-elect JD Vance, who backed the company in 2021 at a $500 million valuation.
Broader Implications
Tether’s investment in Rumble underscores the growing intersection between the cryptocurrency and free speech communities. The partnership highlights Tether’s strategic pivot toward industries that align with its values of decentralization and transparency.
Cantor Fitzgerald & Co. acted as the placement agent and dealer manager for the deal.
BlockBeep.com will continue to provide updates on this story and other significant developments in the crypto and blockchain ecosystem.
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