What happened
Rumble (RUM 1.23%) stock is falling Tuesday following the release of the company's second-quarter results. The streaming specialist's share price was down 11.9% as of 10:45 a.m. ET, according to data from S&P Global Market Intelligence.
Rumble released its Q2 results after the market closed yesterday, posting sales that beat expectations but earnings that failed to meet the market's target. The company recorded a loss of $0.15 per share on revenue of $25 million in the period, while the average analyst estimate had guided for a loss per share of $0.08 on sales of $18.14 million.
So what
Rumble's revenue rose 468% year over year in the second quarter and crushed the average Wall Street target, but the company's loss was also significantly wider than anticipated. Making matters worse, the company is seeing some mixed results on the user engagement front.
NASDAQ: RUM
Key Data Points
Its total number of minutes watched per month rose 46% year over year to 11.8 billion, and hours of uploaded video per day rose 48% to reach 13,229. On the other hand, the company's average global monthly active users (MAUs) came in at just 44 million in the quarter, flat year over year and down from the 48 million MAUs it had in this year's first quarter.
Now what
Rumble's user metrics suggest that viewers and creators on its platform are becoming increasingly engaged. The company's better-than-expected sales results in Q2 also show that it's been able to increase monetization across its platform. But the fact that MAUs declined roughly 8% on a sequential quarterly basis is concerning.
Rumble has attributed the drop-off to increased competition and a slowdown in news and politics outside of the U.S. election cycle. While it's reasonable to expect that the streaming platform will see engagement ramp up in conjunction with new election cycles and other major events, the MAU results in Q2 suggest that the platform is bumping up against a ceiling for its engagement.
RUM PS Ratio (Forward) data by YCharts
Following today's pullback, Rumble is valued at approximately 22 times this year's expected revenue. While the company is still growing sales at a rapid pace, there will be limits to the extent that it can expand monetization if it can't also deliver significant user growth. The streaming video space is cost-intensive and highly competitive, so it's not surprising to see the market reacting negatively to declines for active users in the second quarter.
