On Monday, Wedbush analyst Scott Devitt increased the price target for Rumble, Inc. (NASDAQ: RUM) to $10.00, up from the previous $8.00, while maintaining a neutral stance on the company's stock. The stock, which has seen a significant 38% gain over the past six months according to InvestingPro data, received this adjustment following Rumble's recent announcement about a significant investment from Tether.
Last Friday, Rumble disclosed that Tether had agreed to purchase 103.3 million shares of Rumble's Class A Common Stock at $7.50 per share. This price represents a 4.3% premium over the stock's closing price on the same day. The transaction is set to bring in gross proceeds of $775 million for Rumble, significantly bolstering its balance sheet, which InvestingPro analysis shows already maintains more cash than debt.
The company has outlined its plans for the incoming funds, intending to allocate $250 million to bolster growth initiatives. The remaining amount will finance a self-tender offer for up to 70 million shares. This offer is open to all Rumble Class A Common Stock holders, allowing them to sell their shares back to the company at the same price of $7.50 each.
Additionally, Rumble announced that certain stockholders have entered into support agreements to tender an aggregate of 70 million shares under the same terms. Chris Pavlovski, Rumble's CEO and Founder, will also participate in the tender offer, with the condition of not selling more than 10 million of his shares.
The company assured that its existing Board structure would remain unchanged after the transaction concludes, and Pavlovski is to maintain his super-majority voting control. The strategic investment and the tender offer are both anticipated to be finalized within the first quarter of 2025.
For investors seeking deeper insights, InvestingPro offers comprehensive analysis with 10+ additional expert tips and detailed financial metrics, including exclusive Fair Value calculations that help assess whether the stock is currently overvalued or undervalued.
In other recent news, Rumble Inc. has reported positive developments, including a significant increase in 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. The company's adjusted EBITDA loss improved to $23.5 million. In terms of board changes, Rumble Inc. reported the immediate resignation of David Sacks from its Board of Directors. However, Rumble Inc. also announced the appointment of Jerry Naumoff as an independent director to its Board.
In other significant developments, Rumble Inc. maintained its Perform rating from Oppenheimer following a $775 million equity investment from stablecoin operator Tether. 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. This decision is expected to ease concerns about the company's liquidity as it moves towards generating positive free cash flow.
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.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.