Shares of streaming video platform Rumble (RUM -0.15%) popped on Tuesday on a pair of head-turning headlines. First, the company just launched a highly anticipated new product, and it's looking to acquire TikTok as well. This is why Rumble stock was up about 14% as of noon ET.
Rumble is taking on big tech
Rumble prides itself on being a censorship-free alternative to platforms such as YouTube. However, it desires to be an alternative to public cloud companies as well. This is why the market was excited when Rumble announced yesterday afternoon that its cloud computing service is now open to the public.
Rumble stock already looked like it would have a good day on the news of its cloud product. But CEO Chris Pavlovski took to social media this morning, sharing the company's desire to acquire TikTok from ByteDance. For context, Congress is considering banning the popular app unless ByteDance divests it, giving the opportunity to a buyer such as Rumble.
It's also worth noting that former President Donald Trump believes banning TikTok would give more power to Meta Platforms. And Meta is one of the platforms Rumble is trying to provide an alternative to, which underscores why it might want to acquire TikTok and keep the platform active.
Rumble's cloud is worth more attention from investors
To acquire TikTok, Rumble says it would "join a consortium with other parties," but I have doubts that a deal could be done to make Rumble a big beneficiary. According to Bloomberg, TikTok's U.S. operations could be worth at least $40 billion. By comparison, Rumble has a market cap of just $2 billion and only has $267 million in cash, cash equivalents, and marketable securities as of the end of its third quarter. That's not much to work with to pull off a deal of this magnitude.
The more consequential news for shareholders is the launch of Rumble's cloud services. According to Fortune Business Insights, the infrastucture-as-a-service market (which Rumble Cloud competes in) could be worth $500 billion by 2030. Just a piece of the pie would be meaningful for the company.
Building competitive platforms in the video and cloud spaces is an expensive journey that won't be quick. But Rumble is growing and has big aspirations. Look for management to provide more details about its cloud services when it reports financial results for the fourth quarter of 2023 on March 27.
