Share prices of video-streaming platform Rumble (RUM -12.27%) were up 83.2% during December, according to data provided by S&P Global Market Intelligence. And when all was said and done, the entirety of the monthly gain happened in a single day.
Through Dec. 20, Rumble stock was only up 1%. But after the market closed that day (a Friday), the company announced that the world's third largest cryptocurrency -- Tether (USDT 0.02%) -- had invested $775 million in its business. When the market reopened on Monday morning, Rumble stock skyrocketed.
Rumble stock went on to climb about 130% total for December before pulling back slightly to end the month. By the time 2024 ended, Rumble stock was back where it was on Dec. 23. But this 83% gain stood out from the S&P 500 which dropped 2.5% during the month.
Investors are understandably excited because Rumble is a business with a big vision and could absolutely use the money.
Rumble's runway just got a major extension
Regardless of whether one believes that Rumble is destined for long-term greatness or not, the present reality is that the business is burning through cash. Its cash position is down roughly 60% over the last two years and it's had a negative operating cash flow of over $100 million in the last 12 months, as the chart below shows.
Data by YCharts.
Given this scenario and given that it's still a ways away from generating positive cash flow, many investors questioned Rumble's long-term ability to carry out its ambitious vision. It wants to build one of the biggest streaming video platforms in the world as well as become one of the largest cloud providers.
Tether's cash infusion completely changes the equation for Rumble in coming years, which is why the stock soared.
What's next for Rumble?
Founder and CEO Chris Pavlovski is excited about the fresh cash infusion, saying it's something that "fuels our growth initiatives." And I think that's the best way to think about this and about Rumble stock going forward. The company has plenty of cash again. Now it's all about laying the foundation for high-octane, top-line growth.
Rumble's third-quarter revenue was only $25 million compared to its addressable market that's worth trillions of dollars. Q3 revenue was up 39% year over year. This is the caliber of growth that investors will want to see sustained for multiple years. By contrast, if Rumble's revenue growth meaningfully slips after this generous investment from Tether, I think it would be fair to question Rumble's long-term potential.
