Technology company shares Clutter (NASDAQ: RUM) are at a 52-week high at the time of writing, having risen around 300% in value since their January low. And much of this jump is thanks to a massive $775 million investment from the investment arm of Tether Limited, the company behind the cryptocurrency stablecoin. Tether (CRYPTO: USDT).
Tether is the third largest cryptocurrency in the world market capitalization. At the time of writing, the market cap is almost $140 billion, which is just shy of it Bitcoin And Ethereum. But Tether is not like these other two cryptocurrencies; it is a stablecoin.
A stablecoin intends to have a 1-to-1 price correlation with something else. For example, a US dollar stablecoin must always be worth €1. It is for people who want to explore the world of cryptocurrency without the volatility. Simply explained: they deposit $1 and Tether issues one new stablecoin worth $1.
According to Tether, the company had approximately $125 billion in reserves as of September 30 (its market capitalization at the time was $119 billion). The majority of these reserves are in US government bonds. It needs to maintain these reserves in case people want to exchange their stablecoins for dollars. But Tether can make money for itself in the meantime with these massive reserves.
Tether CEO Paolo Ardoino recently said it is on track to hit $10 billion in net profit by 2024, which is an astonishing amount for any company, let alone a cryptocurrency company. And the company doesn’t just rake in these profits, but invests money in them from time to time, which is what it does with Rumble.
Rumble turned heads when it went public in 2022 because this small company has big ambitions. The company plans to build an internet infrastructure free of censorship and hopes to compete with it Alphabet‘s video streaming platform, YouTube; Amazon‘s cloud computing service, AWS; social media platforms; and more.
The problem is that Rumble can’t just make all this happen; it takes money. And if the ambitions are so high, it costs a lot of money to build. Unsurprisingly, the company had a net loss of $116 million in 2023 and has already lost another $102 million in the first three quarters of 2024.
But give Rumble some credit. The graph below shows the number of shares outstanding with the orange line. Ignore the short spike shortly after it went public (the accounting for these things can get temporarily distorted when it goes public). The chart shows that management has not raised any money by diluting shareholders with stock offerings so far. No debts have been incurred.
