A Possible Big Move in the AI Market: Rumble Considers Acquisition of Northern Data
It seems like the American company Rumble is considering a hefty $1.2 billion purchase of Northern Data AG, a company based in Germany. This strategic move is seen as a way for Rumble to expand from its initial focus on video-sharing and delve into the rapidly growing market of AI infrastructure. This news has caused Rumble's share value to climb by nearly 7% in early trading, while Northern Data's shares in Germany have plummeted by over 20%.
How This Could Impact Your Investment Strategy
If you're an investor, this could be an exciting time to consider investing in Rumble. With the potential acquisition, Rumble's reach and influence could expand significantly, giving them a more substantial presence in the AI infrastructure market.
When looking at Rumble's recent performance, they reported a revenue of $25.1 million for the second quarter, marking a 12% increase from the same period the previous year. However, the number of monthly active users dropped by 3.8% to 51 million. This decrease in active users is attributed to a decline in news and political commentary after the U.S. election.
More Information About the Possible Acquisition
Rumble, primarily a video-sharing platform, hosts and distributes content created by users. Northern Data AG, on the other hand, is known for its specialization in AI and high-performance computing infrastructure solutions.
With this potential acquisition, Rumble would gain control of Northern Data's GPU-heavy cloud unit, Taiga, and their large-scale data center business, Ardent. Rumble has plans to integrate these into its existing operations. Taiga's cloud unit is particularly valuable because of its vast inventory of GPU chips, which are essential for AI workload but also scarce and expensive.
Under the proposed acquisition, Northern Data shareholders would receive 2.319 new Rumble Class A shares for each share they currently own. If all shares are exchanged, Northern Data shareholders would own around 33.3% of the combined company. The proposed deal values Northern Data at approximately $18.3 per share, which is about 32% lower than its last closing price in Frankfurt.
It's important to note that Northern Data's board is still reviewing the potential offer from Rumble, and they are open to continuing discussions. However, both companies have stated that there's no guarantee these discussions will result in a formal offer for the German firm.
Should You Consider Investing in Rumble?
When it comes to Wall Street, analysts have a Moderate Buy consensus rating on Rumble's stock, based on one Buy and one Hold assigned in the recent three months. The average Rumble stock price target of $14.50 per share implies a potential upside of 84%.
This potential acquisition could be a significant move for Rumble, and it's definitely worth keeping an eye on if you're interested in investing in the AI infrastructure market. However, as always, it's important to do your own research and consider your financial situation before making any investment decisions.