What happened
Rumble (RUM) was rumbling quite a bit on the market Thursday but for the wrong reason. After being fingered as a lousy stock by a pundit and divulging rather weak financials, the ambitious online video company saw its share price erode by just shy of 13% on the day.
So what
Of those two factors, the bearish analysis was the more immediate. Thursday morning, Edwin Dorsey of The Bear Cave newsletter published a post entitled "Problems at Rumble."
Rumble is positioned as a YouTube-like site for social media users who feel that mainstream video sites unfairly censor and restrict content.
But that's turning out to be quite the narrow niche; Dorsey pointed out that the company is bringing in meager amounts of revenue while paying handsomely for content from contentious political and media personalities such as Tulsi Gabbard and Glenn Greenwald.
Now what
Dorsey's takedown comes a mere day after Rumble filed documentation for a sale of common stock and warrants from both itself and existing shareholders.
The market's concern isn't so much that the company is going to the well for new financing and current investors are cashing out; rather, it's that Rumble disclosed the current state of its finances, and these are highly discouraging. For the first six months of the year, the company drew a paltry $8.4 million in revenue. That was more than eaten by nearly $10 million in expenses.
While it's a given that relatively early-stage companies struggle with profitability, the most promising ones take in far more than $8 million or so every six months. Rumble hasn't yet proven that it can thrive as a publicly traded company, and if its under-performance continues, it might just be in for more share-price declines.
