Will 2025 be the year of the Stock Rumble?

The rise of Scold (NASDAQ:RUM) The stock has attracted investor interest in recent months. The online video platform’s share has increased by almost 75% over the past year, as the site becomes increasingly popular and carves out a niche among small content creators and advocates. freedom of expression.

Still, Rumble’s 67 million monthly active viewers represent only a small fraction of Rumble’s audience. AlphabetYouTube, which attracts more than 2.5 billion monthly active users, according to estimates. It also lacks the level of financial support and Google search capabilities that support YouTube.

Therefore, the question for investors is whether the software as a service (SaaS) stock will continue on its path to making 2025 a record year or whether it is a company investors should avoid .

How Rumble Stands Out

Chris Pavlovski, who is still CEO of Rumble, founded the company in 2013. Pavlovski felt that incumbent video sites tended to disenfranchise smaller content creators, leaving Rumble with a market niche to fill. Later, Rumble’s commitment to free speech may have given it a competitive advantage among some content creators.

However, what took Rumble’s growth to the next level was the pandemic. At that time, the audience grew 44 times, reaching 36 million monthly active users in Q3 2021.

It was at this time that venture capital firm Narya and investor Peter Thiel became investors in Rumble. Building on this growing interest, a special purpose acquisition company (SPAC) acquired Rumble on September 15, 2022, taking the company public.

The stock has lost about 30% of its value since then, despite the site’s continued growth in popularity. By the third quarter of 2024, the number of monthly active users had increased to 67 million, compared to 53 million in the same quarter of the previous year.

RUM data by YCharts

This has given it popularity that allows it to generate more revenue through advertising and licensing fees. Additionally, Rumble generates subscription revenue from viewers who prefer an ad-free experience and content creators using its SaaS platform to create and publish videos.

This growing usage may also have helped result in the aforementioned stock market gains, leaving many investors wondering if 2025 will be the year it finally hits record highs.

How are your finances doing?

Unfortunately, its financial situation could very easily dash hopes for a record rise in 2025. In the first nine months of 2024, revenue was $65 million, an annual increase of just $8 %.

Additionally, for this period, cost of sales was $104 million, leaving Rumble with a negative gross margin. Including operational and non-operational expenses, its net loss in the first three quarters of 2024 was $102 million, compared to a net loss of $87 million for the same period last year.

Currently, its liquidity stands at $132 million, meaning it can only sustain the same amount of losses for a few more quarters before turning to debt or issuing equity for additional funding . Rumble has only increased its share count by a little more than 1% since the SPAC bought the company. However, with shares selling for around $8 per share as of this writing, the company may be reluctant to put pressure on its stock price by taking this approach.

Additionally, the stock’s recent rise in price has brought its price-to-sales (P/S) ratio to 19. Although the sales multiple has steadily declined since its IPO, this could convince investors to let go. side a title that appears too expensive and in financial difficulty.

Is 2025 the year of the Rumble?

Given Rumble’s financial situation and stock price, it is unlikely that 2025 will be the year it achieves record growth. At first glance, its growing user base and rising stock price might seem attractive to many investors.

Unfortunately, Rumble continues to suffer such massive losses that it will likely need to find additional funding soon. Since this could mean dilution of its stock, it is less likely to grow. Until it can at least achieve positive gross margin, investors should probably ignore Rumble under current conditions.

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Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Will Healy has no position in any of the stocks mentioned. The Motley Fool holds positions in and recommends Alphabet. The Motley Fool has a disclosure policy.