Online video platform Rumble (NASDAQ:RUM) generated business headlines earlier Tuesday morning as it stated it was ready — along with a group of other entities — to buy and operate TikTok in the U.S., which faces a legislative overhang. Subsequently, RUM stock popped sharply higher, gaining about 15% in early afternoon trading.
According to a Seeking Alpha report, Rumble CEO Chris Pavlovski addressed TikTok boss Shou Zi Chew on X (formerly Twitter), stating that the censorship-resistant platform is ready to serve as a cloud technology partner.
Last week, a top Republican lawmaker stated that he would help facilitate a House vote on a bill that would force ByteDance, the parent company that owns the popular short-form video app, to sell. Otherwise, the app would face a ban in the U.S. Notably, the initiative materialized after the Energy and Commerce Committee had unanimously voted to approve the bill.
This bill represents the latest efforts by lawmakers to force TikTok to cut ties with ByteDance. Over the years, tensions have been rising between the U.S. and China, particularly over data privacy. Last month, a U.S. official warned of China’s growing offensive cyber power.
RUM Stock Rises Amid Possible Opportunity
For Rumble, it’s an opportunistic and intriguing prospect to help boost the business and, in turn, RUM stock. Per Seeking Alpha, as of the quarter ended Sept. 30, 2023, Rumble had 58 million average global monthly active users (MAUs). It also carried about $267 million in cash and equivalents. However, the conservative video platform — backed by entrepreneur and venture capitalist Peter Thiel — is not profitable.
To be sure, the red ink that Rumble incurs hasn’t stopped enthusiasm for RUM stock this year. Since the beginning of January, shares have gained about 76%. However, it’s down more than 14% in the past 52 weeks. It has also lost roughly 23% since making its public market debut.
On the flipside, the brand value of TikTok (which is known as Douyin in China) amounted to $84 billion in 2023. Per Statista, this valuation makes TikTok the most valuable unicorn — or a privately held company with a value of over $1 billion — in the world.
With Tuesday’s sharp jump, RUM stock now carries a market capitalization of $2.15 billion. On March 27, the company is scheduled to release its fourth-quarter earnings report. Regarding per-share profitability, analysts anticipate a loss of 22 cents.
Why It Matters
Despite fierce opposition to TikTok when Donald Trump was president, he has come out against barring the app. Stating that rival social networks would soak up TikTok’s audience if it got banned in the U.S., Trump’s flip-flop puts House Republicans in an awkward position. It’s just another twist in a political saga becoming all the more dramatic.
On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
