Neutral video platform Rumble announced a deal to take the company public today, but should you look to invest when it eventually debuts?
Dec. 2, 2021
Controversial video platform Rumble Inc. today announced plans to enter the stock market through a SPAC early next year. In light of this, we examined the company and the impending deal to see just how valuable an investment it might be.
So what is Rumble Inc.?
Rumble is a Canadian online video platform. The company pitches itself as a rival to YouTube that prides itself on the belief that its creators should be free to express themselves without fear of censorship. It currently boasts 36 million average monthly users as of Q3 and has been building a strong, vocal supporter base.
The company has seen accelerated growth since 2020 in particular following a host of conservative U.S. political figures joining the platform in the wake of censorship of some of these figures on YouTube and other platforms. Founder and CEO Chris Pavlovski claims that Rumble doesn't use algorithms to recommend content, it utilizes a simple chronological feed. "Our value prop is quite simple: it's to offer a platform without preferencing," he added.
The company was valued at roughly $500 million following a funding round in May that saw prominent venture capitalists such as Peter Thiel and J.D. Vance invest in the company.
When is it going public?
Today, Rumble signed an agreement with CF Acquisition Corp. VI (NASDAQ: CFVI), a special purpose acquisition company. It's still very early so there are no concrete dates attached to the merger yet, but the deal is expected to close in Q2 of 2022.
The deal sees Rumble valued at $2.1 billion, a sizeable jump from its mid-year value. Current shareholders will have the chance to earn additional shares if the stock price reaches set targets of $15 and $17.50 respectively, giving us a good idea of the expected price range of the combined stock when it eventually debuts.
So should I buy rumble stock?
Rumble has done a good job of carving out a specific niche with an innovative unique value proposition. However, attempting to steal a large proportion of the market from YouTube will be no easy task. Google's video platform currently controls roughly 75% of the online video market and, despite its criticisms, only seems to be growing.
Its reliance on creators who have been removed from other platforms could also prove to be problematic. Pavlovski preaches a platform where nobody needs to fear censorship, but without appropriate guidelines, the resulting content could leave the company mired in controversy. This might not be a problem for users of the platform, but investors might see things differently.
As always, we recommend that you wait for at least two quarterly earnings reports to be published before considering investing. In this case, our advice is no different. Much will be made of how Rumble generates profits as it enters into life as a publicly-traded company, and investors will be keeping a close eye on the balance sheets.
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