Mike Smith
9 hours ago
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Tether, the world's largest stablecoin issuer, has made a $775 million strategic investment in video platform Rumble, which bills itself as an alternative to YouTube. The deal, according to Reuters, reflects Rumble’s desire to strengthen its position in the crypto industry, which is especially relevant after the company announced that it would spend $20 million to purchase Bitcoin from its excess cash reserves.
The news of the funding had a significant impact on Rumble’s stock price, which had previously declined due to the Federal Reserve’s rising interest rates. The platform’s shares soared 44.6% on the secondary market on the news of the investment, although they were down 1% by the close of trading on Friday.
Tether’s current strategy to expand its spheres of influence is linked to the company’s impressive financial results. Tether reported $2.5 billion in revenue from USDT stablecoin assets in Q3 2024, allowing the company to actively diversify its investments. Tether's new CEO, Paolo Ardiono, is focusing resources on promising areas such as artificial intelligence, cryptocurrency mining, and decentralized data exchange platforms.
The investment in Rumble is a confirmation of Tether's interest in projects aimed at creating censorship-resistant communication solutions. The company is also actively developing its own peer-to-peer chat and video conferencing app, Keet, which uses technology from Ardiono's other company, Holepunch.
Rumble plans to use $250 million of the funding to implement business development initiatives. The remainder will be used to offer 70 million shares of Class A common stock at a price of $7.50 per share, which is the same price at which Tether acquired 103,333,333 shares of the company. Chris Pawlowski, CEO of Rumble, retains a majority stake and stressed that he will not sell more than 10 million of his shares.
In his statement, Pawlowski noted that there is a deep connection between cryptocurrencies and free speech communities based on a desire for transparency and decentralization. He also emphasized that this investment provides Rumble shareholders with a unique opportunity for immediate liquidity.
According to the financial results for the third quarter, Rumble's revenue increased by 39% compared to the same period last year and amounted to $ 25.1 million, but the net loss increased to $ 31.5 million. The platform has an audience of approximately 67 million monthly active users, and the company continues to focus on attracting a loyal audience.
The cloud services market, where Rumble is also represented, continues to be an important area for the company. The purchase of shares was accompanied by Cantor Fitzgerald & Co., which acted as the placement agent and dealer manager.
