Rumble stock price faces headwinds as it crashes to record low

Rumble (NASDAQ: RUM) stock price has severely underperformed the market this year. The shares have plunged in the past seven straight days and are now trading at the lowest level on record. They have dropped by more than 75% from the highest level on record, giving it a market cap of over $1.36 billion.

Is Rumble a good investment?

Rumble is a fast-growing company in the technology and media industry. It aims to become a free speech alternative to YouTube, the biggest video brand in the world. 

As a result, it has attracted thousands of creators who believe that YouTube and other mainstream brands are censoring free speech. Rumble has also grown to reach millions of users from around the world.

The most recent data shows that the number of monthly active users has been growing in the past few years. Its monthly active users peaked at over 80 million in Q4’22. It had 48 million and 44 million MAUs in the last two quarters. Rumble has more room to grow, especially as we head to the next year’s election. 

Challenges ahead

Still, the company faces numerous challenges ahead. The most important one is that it could struggle to attract big advertisers like Apple, Microsoft, and Unilever. In a world where many businesses are going woke, it will be difficult for most of them to advertise in the company.

The other challenge is that the company could be pressured by its key service providers like Google and Apple. These two companies provide its app in their app stores. Fortunately, Rumble has built its cloud infrastructure, making it immune to the biggest challenges.

The other challenge is that it is battling with YouTube, a behemoth that pays creators attractive advertising fees. As such, content fees could prolong its path to profitability.

The most recent results showed that Rumble’s revenue jumped to $25 million as the cost of services jumped to $40.8 million. Cash in its balance sheet dropped from $338 million to $296 million. 

Therefore, Rumble’s problems can be summarised into weak user growth, rising operation costs, and monetising issues. It is also highly overvalued based on its weak revenues and huge losses.

Rumble stock price forecast

The daily chart shows that the RUM share price has been in a strong bearish trend in the past few months. It recently crossed the important support level at $5.81, the lowest level in December last year. The shares have remained below the 50-day and 100-day moving averages while the Relative Strength Index (RSI) has moved to the oversold level.

Therefore, the path of the least resistance is bearish, with the next psychological level to watch being $4. The stop-loss of this trade is at $5.81.