Rumble's Rise: Invest or Wait?

Interest in Rumble's stock, a provider of online videos, has increased significantly in recent months. The stock price has risen by nearly 75% over the past year as the platform has carved out a niche among small content creators and free speech advocates. Nevertheless, Rumble's audience remains small compared to YouTube, with 67 million monthly active users compared to YouTube's 2.5 billion users. Rumble also lacks the financial backing and search capabilities that YouTube receives from Alphabet. The critical question for investors is whether Rumble's stock is on track to make 2025 a record year or if the company should be avoided. Rumble was founded in 2013 by Chris Pavlovski, who continues to serve as CEO. Pavlovski recognized that existing video platforms often disadvantage smaller content creators, finding a market niche. Supporting free speech has given Rumble a competitive advantage among certain content creators. The growth spurt spurred by the pandemic accelerated Rumble's development significantly. The number of monthly active users increased 44-fold to 36 million in the third quarter of 2021. At that time, the venture capital firm Narya and Peter Thiel invested in Rumble, and a Special-Purpose Acquisition Company (SPAC) acquired Rumble on September 15, 2022, taking the company public. Since then, the stock has lost about 30% of its value despite the platform's continued rise in popularity. In the third quarter of 2024, the number of monthly active users rose to 67 million, compared to 53 million in the same quarter of the previous year. Thanks to this growth, Rumble was able to generate higher advertising and licensing revenue. The company also earns subscription revenue from viewers who prefer an ad-free experience and from content creators who use its SaaS platform. The increasing usage may have fueled the mentioned stock gains. But now, many investors are wondering if 2025 will be the year the stock reaches record highs. However, Rumble's financial situation could thwart any hopes of a record surge in 2025. In the first nine months of 2024, revenue was $65 million, representing an annual increase of only 8%. At the same time, sales costs for this period were $104 million, indicating a negative gross margin. Considering operating and non-operating expenses, the net loss in the first three quarters of 2024 was $102 million, compared to a net loss of $87 million in the same period of the previous year.