Why Is Rumble (RUM) Stock Down 15% Today?

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  • Rumble (NASDAQ:RUM) is in focus today, with a 15% decline in RUM stock tied to an S-1 filing.
  • This filing provides for the registration of shares for sale, something which could lead to further selling down the road.
  • The company maintains this S-1 is part of the standard de-SPAC process, but investors aren’t so sure right now.
RUM stock - Why Is Rumble (RUM) Stock Down 15% Today?

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Among the companies in focus for investors today is Rumble (NASDAQ:RUM). This company, which operates a video-sharing platform similar to that of Alphabet’s (NASDAQ:GOOG, NASDAQ:GOOGL) YouTube, has seen its shares spiral downward today. At last check, RUM stock was down nearly 19% on very heavy volume.

This move appears to be the result of an S-1 filing released by the company today. While the company did clarify on Twitter that this filing was not tied to a new equity raise, investors are clearly spooked. That’s because along with this filing, some financial data was released which investors don’t seem to like.

According to reports on today’s filing, it appears the company, which was initially valued at more than $2.5 billion, brought in only $8.4 million in revenue during the first half of this year. On a price-to-sales basis, that’s incredibly expensive. Additionally, the company’s loss for the first half of this year was more than $8.5 million. That means Rumble has a lot of work to do to grow and do so profitably.

These fundamental factors, in addition to an S-1 filing which stipulates the registration of shares for sale, provide a very bearish backdrop for the company. While it appears these registered shares are part of a customary process tied to the company’s SPAC transaction, it’s clear this is a stock the market isn’t viewing positively right now.

Is RUM Stock Worth a Look?

There’s a reason why many de-SPAC companies have sunk dramatically this year. Rumble is just one of many in this regard. Following the financing received by the initial merger, there are plenty of consequential things investors need to watch. How shares are locked up, when these lockups end and what that means for the total number of outstanding shares are all important metrics.

In this case, it appears this S-1 filing is tied to existing shares that were put aside for insiders at the time of the merger. While these may still be locked up, at some point, they’ll be released into the market. The kicker is that Rumble really won’t benefit from these shares being unlocked, and further waves of selling could be on the horizon.

Thus, for existing investors, it appears RUM stock is a lot less attractive today than it was before its SPAC merger. For investors looking to put new capital to work, there appear to be many other great options to consider right now.

On the date of publication, Chris MacDonald did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.


Article printed from InvestorPlace Media, https://investorplace.com/2022/10/why-is-rumble-rum-stock-down-15-today/.

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