Rumble Stock Soars on Tether Investment and Meme-Stock Momentum

Rumble Inc. (NASDAQ: RUM) shares are surging today, up a stunning 66% as of 10:15 a.m. ET, following the company's announcement that it has secured a $775 million investment from Tether, the company behind the USDT stablecoin. The influx of capital has reignited meme-stock momentum for Rumble, with traders and investors drawn to the potential for continued price increases driven by social media hype and coordinated buying.

Tether's investment in Rumble reflects the company's shared values of decentralization, independence, transparency, and the fundamental right to free expression. The streaming video specialist will use $250 million of the proceeds to fund growth initiatives, providing a couple of extra years of runway at its current pace. The remaining $500 million will be used to buy back stock from current shareholders at a price of $7.50 per share, though it is unlikely that many shareholders will take the offer given the stock's recent price increase.

Rumble's business has been posting significant losses and going through its cash reserves at a relatively rapid pace. The company posted a net loss of $31.5 million in the third quarter and closed out the period with $132 million in cash and short-term equivalents. The additional $250 million it will have on its books after it completes its self-tender buyback initiative will extend its ability to fund its operations by two more years based on its current cash-burn rate.

However, there are reasons to be skeptical about whether the stock's recent momentum can be sustained. While the influx of capital is good news for the business, the fundamentals of the deal and Rumble's streaming video service suggest that investors should be careful. The company's engagement and monetization metrics have been relatively weak, even with the tailwinds of recent political events, and the business is not scaling effectively. At this point, investors in Rumble are either making a meme-stock play or betting that Tether can play an active and useful role in either continually sustaining or radically reshaping its struggling business.

Rumble's stock price has been on a rollercoaster ride in recent days, with the share price up by 103% over the last month of trading. The investment from Tether has reignited meme-stock momentum for the company, with traders and investors hoping that the cryptocurrency giant will radically transform Rumble's business. However, the fundamentals of the deal and the streaming video service's business suggest that investors should be cautious about relying solely on meme-stock dynamics for long-term sustainability.

In conclusion, Tether's investment in Rumble has provided the company with much-needed cash, extended its runway, and opened up new growth opportunities. However, the sustainability of the stock's recent price surge depends on the company's ability to execute on its growth initiatives and improve its fundamentals. Investors should monitor the company's progress and consider the broader market sentiment when evaluating Rumble's stock performance.