Tether makes a $775 million 'strategic investment' in Rumble, and the stock price rises 44.6%

According to The Block’s report, Tether, the world’s largest stablecoin issuer, has made a ‘strategic investment’ in the right-wing media platform Rumble, with an amount of $775 million.

Last month, Tether announced that it would allocate up to $20 million from its excess cash reserves for Bitcoin investments.

This investment appears to indicate Rumble’s further attention to the cryptocurrency industry. Rumble announced last month that it will allocate up to $20 million in cash reserves for Bitcoin.

Following the recent interest rate news from the Federal Reserve, Rumble’s stock price steadily declined, dropping 1% at Friday’s market close. However, after news of Tether investment emerged, the stock surged up to 44.6% in after-hours trading.

Against the backdrop of rising interest rates, Tether has reaped substantial profits from the returns on USDT-backed assets. For example, in the third quarter of 2024, the company’s net profit reached 25 billion US dollars. Therefore, under the leadership of the new CEO Paolo Ardiono, Tether is continuously making strategic investments, expanding into new areas such as AI, Bitcoin mining, and decentralized messaging.

It is worth noting that Tether’s investment in video sharing platform and cloud service provider Rumble reflects Ardiono’s interest in combating censorship communication. One of Tether’s secret projects is helping to develop a peer-to-peer chat and video conferencing application called Keet, which uses technology created by Ardiono’s other company Holepunch.

Rumble said it would use $250 million in funding to “support growth plans.” The remaining funds will be used for self-tender, purchasing up to 70 million Class A common shares at a price of $7.50 per share - the same as Tether’s investment price. Rumble’s Chairman and CEO, Chris Pavlovski, will retain control of the company and has stated that he will not sell more than 10 million shares. Tether will purchase a total of 1,033,333,333 shares.

“Many people may not realize that there is a strong connection between cryptocurrency and the freedom of speech community, stemming from the passion for freedom, transparency, and decentralization,” Pavlovski stated in the declaration, noting that this investment represents “an immediate liquidity event for all of our shareholders”.

In the third quarter, Rumble’s revenue was $25.1 million, a year-on-year increase of 39%, despite a net loss of $31.5 million (an increase from $29 million in the third quarter of 2023). Its average monthly active users are approximately 67 million and mainly target conservative audiences. Rumble’s cloud service business hosts Truth Social. Peter Thiel, Vivek Ramaswamy, and Vice President-elect JD Vance invested $500 million in Rumble in 2021 with a valuation.

Cantor Fitzgerald & Co., Tether’s counterpart, is serving as the placement agent and dealer manager for this transaction.