Rumble SPAC: What you need to know about the Rumble IPO
Joshua Warner September 7, 2022 7:43 AM
The video distribution and cloud computing company has vowed to provide an alternative to Big Tech platforms.
Rumble IPO date: When will the SPAC deal complete?
Rumble is due to go public as early as Friday September 16.
A Special Purpose Acquisition Corp (SPAC) named CF Acquisition Corp agreed to merge with Rumble Inc at the start of December 2021. The SPAC is holding a shareholder vote with the aim of securing approval for the merger on Thursday September 15. The pair have said the combination should ‘close shortly’ after shareholders have given the green light.
Investors that were on the shareholder register at the close of play on July 25 will be eligible to vote.
The SPAC continues to trade under the ticker ‘CFVI’ until the merger is completed but will convert to Rumble Inc once the deal is done and change its ticker to ‘RUM’.
What is Rumble?
Rumble is a video distribution platform that prides itself on being neutral, allowing complete freedom of expression and creativity. The idea is that Rumble provides a home for creators without the risk of being censored, removed or silenced that comes when using mainstream platforms such as YouTube.
‘Rumble is designed to be the rails and independent infrastructure that is immune to cancel culture. We are a movement that does not stifle, censor, or punish creativity and believe everyone benefits from access to a neutral network with diverse ideas and opinions. We are on a mission to restore the internet to its roots by making it free and open once again,’ according to Rumble’s founder and CEO Chris Pavlovski.
‘For the first time, investors will have the opportunity to join us in our fight to defeat cancel culture and protect a free and open internet. We believe everyone benefits from access to more ideas, diverse opinions, and dialogue,’ says Pavlovski.
Importantly, its video distribution platform is supported by its own infrastructure named Rumble Cloud, which is also being used by other companies that have been attracted to ‘a new and cancel-culture-free cloud platform’.
Rumble: Why does TRUTH Social matter?
The most significant customer to date for Rumble Cloud, as well as its advertising platform, is TRUTH Social, the social media platform owned by former president Donald Trump’s company named Trump Media & Technology Group (TMTG). Like Rumble, TRUTH Social also promotes uncensored content and describes itself as a ‘Big Tent’ for all American voices. The two share a mission to provide open platforms for content and to offer alternatives to Big Tech platforms.
However, TRUTH Social has struggled since launching earlier this year. For example, it is still unavailable on the Google Play Store, meaning many Americans are unable to download it. Plus, its own plans to go public by merging with its own SPAC named Digital World Acquisition Corp looks on the brink of collapse. DWAC shareholders will vote on whether to provide up to an additional 12 months for it to complete its merger with TMTG on Thursday September 7, having delayed it after failing to secure enough support.
As TRUTH Social is currently the most important platform using its cloud computing platform and advertising network means Rumble needs it to be successful for its own sake, at least until it can secure a more diverse customer base.
Who owns Rumble?
Anyone preparing to invest before or after the SPAC deal is completed should be aware that founder Pavlovski will retain control over the company and be able to vote through any changes he wants. This, Rumble argues, will ensure it can maintain its strategy of remaining neutral.
Existing owners of Rumble will retain 82% of the company after the merger, with investors in the SPAC owning just 12%. The PIPE investors will own 4% and the SPAC sponsor will own the remaining 3%.
How much is Rumble worth?
The SPAC combination gives Rumble an enterprise value of $2.1 billion. Importantly, those that own Rumble before the merger is completed have the ability to earn additional shares in the company if the share price hits thresholds at $15.00 and $17.50. That has the potential to increase Rumble’s valuation to $3.15 billion if those stock price targets are met after the merger is completed.
The merger will provide the new Rumble with $400 million in cash. That is comprised of the $300 million raised by CF Acquisition Corp when it went public and $100 million worth of Private Investment in Public Equity (PIPE) funds. Once transaction costs are paid for, Rumble should be left with a cash balance of around $383 million.
How does Rumble make money?
Rumble is only just starting to monetise its distribution and has three sources of income in the pipeline. The first is advertising, which is what drives most social media and video distribution platforms. The second is through subscription services and its new upcoming tipping tool. The third is offering Rumble Cloud as an Infrastructure-as-a-Service to other platforms.
The company is going after advertisers directly by building its own ad network and sales team in-house, which it believes will allow it to reap bigger rewards by sharing less with publishers and other middlemen.
The acquisition of Locals.com in 2021 is what underpins its ambitions with subscriptions. Locals is a platform that homes an array of content and fostering a community around it. Rumble says this allows creators to make money from subscriptions, providing a source of income that is ‘not influenced by corporate advertisers and special interests’.
Rumble Cloud is being promoted as a service that will remain neutral, without censorship or partisanship, which it believes will pay off if Big Tech platforms continue to restrict content.
Is Rumble profitable?
No, Rumble is not profitable. The company has not disclosed full financials and its most recent updates and presentations have focused on user numbers and engagement levels, but it is almost certain that Rumble has little income at present, is burning through cash and in the red as it is prioritising growth and only just starting to monetise content and its cloud infrastructure.
What is Rumble’s strategy and why is it going public?
Rumble has said the immediate priority is growing its user base and improving engagement while laying the foundations to monetise consumption. To do that, it plans to use the $400 million cash injection from the SPAC combination to attract new content creators to its platforms, build out its independent infrastructure, expand its workforce, launch new marketing campaigns and to fund acquisitions.
Rumble said it had a record 44 million Monthly Active Users (MAUs) in the second quarter of 2022, which grew 76% from the year before and was up from 41 million in the previous quarter.
That is impressive considering just two years ago it only had 1 million users. In fact, Rumble claims it has so far largely matched the rate of growth delivered by TikTok in the US when it first started to gain traction. The rapid growth comes at a time when many mainstream social media platforms are starting to find it much more difficult to grow user numbers, although this is from a very low base.
Engagement has also increased. The number of videos being uploaded was 283% higher than the year before, with users watching an average of 8.1 billion minutes per month during the second quarter, up 62% from the year before.
It has also been focused on bringing big names to the platform to attract more users, including Trump and other figures from journalist Glenn Greenwald to mixed martial artist Jorge Masvidal. It believes it can continue to attract more major content creators as censorship on Big Tech platforms increases. It is actively seeking out top creators and helping them improve distribution of their content. For example, it says radio host and political commentator Dan Bongino had 864,000 subscribers when he was on YouTube but has 1.9 million on Rumble.
For now, it is focused on attracting creators and influencers focused on news, politics and, interestingly, pets. It has gaming, health, comedy, investing, cryptocurrencies, religion and science in its crosshairs already, with arts, music, education and sports also on the radar.
New features and tools are on the way to improve its platform. Livestreaming and camera integration are among those most notable. It also plans to introduce gifting and tipping options, as well as the ability to deeplink, in order to help creators monetise their content.
All attention is on the US at present, but Rumble does plans to expand internationally in the future. Other Western markets including the UK, Canada, Australia, France and Italy are at the top of the expansion list.
Who are Rumble’s competitors?
Rumble competes with an array of companies. In terms of its video distribution platform, the main competitor is YouTube, but other social media sites such as Facebook, Instagram, Snapchat and Twitter are all vying for people’s attention. Rumble has not shied away from the fact it is taking on some of the biggest companies in the world, from Meta to Alphabet.
Its ambitions in the cloud computing space means it will also be battling for market share in a highly concentrated market. Amazon Web Services and Microsoft Azure already control over half of the global market, while the other half is held by big names spanning from Google and Alibaba to IBM and Salesforce.
How to trade Rumble stock
You can already trade shares in CF Acquisition Corp with Forex.com and will be able to trade Rumble shares once the combination is completed. Get started in just four easy steps:
- Open a Forex.com account, or log-in if you’re already a customer.
- Search for ‘CFVI’, or ‘RUM’ after the combination, in our award-winning platform
- Choose your position and size, and your stop and limit levels
- Place the trade
Or you can try out your trading strategy risk-free by signing up for our Demo Account.
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