This week, Rumble's stock is experiencing a significant drop.
Rumble's stock is diving in this week's trading. The company's share price plunged 12.5% from last week's market close as of 1 p.m. ET Thursday, based on data from S&P Global Market Intelligence.
Rumble's stock is taking a nose dive this week due to the recent interest rate news from the Federal Reserve. While the Fed granted the anticipated 25-basis-point interest rate cut yesterday, Chairman Jerome Powell's comments left investors uneasy.
Rumble experiences major sell-off due to rate outlook
During its meeting yesterday, the Federal Reserve enacted its third interest rate cut since September. However, Powell hinted that the central bank would adopt a more cautious stance on rate cuts in 2020.
Many investors had been eager to see a full-point rate cut across four quarters in 2020. Now, it seems only two cuts of 25 basis points will be implemented. Market conditions may change, but investors responded negatively to the news and instigated significant sell-offs yesterday. Companies with dependent valuations on growth, such as Rumble, were among the most affected.
What's in store for Rumble stock?
Rumble is a newcomer in the fiercely competitive video-streaming market. The company's Q3 report revealed revenue of $25.1 million -- a 39% year-over-year increase and a 12% sequential growth compared to the previous quarter. Nonetheless, the business reported a net loss of $31.5 million, rising from a loss of $29 million in the same quarter of the previous year.
In spite of favorable conditions connected to the U.S. election cycle, the company has been displaying lackluster user engagement and monetization figures. Rumble ended the quarter with 67 million average monthly active users, and average revenue per user came in at $0.33 -- a decrease from $0.37 in Q2. So far, the company does not appear to be scaling successfully, and there's a substantial risk that user engagement momentum will diminish as the election cycle comes to a close.
In light of the Federal Reserve's cautious stance on future rate cuts, investors sold off stocks heavily, including Rumble, due to its reliance on growth financing for its video-streaming business. Amidst these financial challenges, Rumble needs to strategize its money management and potentially consider different investing options to stabilize its financial position.
