Last week, “Trump trade” stocks exploded on rising speculation that Donald Trump will win the upcoming Presidential election. Basically, a “Trump trade” is where investors bet on stocks, sectors, and asset classes that are expected to benefit from a second Trump administration - such as Bitcoin (BTCUSD), steel stocks, and domestic manufacturers, for example.
This week, the election calculus has gotten more complicated, after President Biden withdrew from the race and Vice President Harris stepped in as the presumptive Democratic nominee. However, there's one Trump trade that could still see plenty of action in the weeks and months leading up to the election, regardless of which candidate emerges as the favorite in the polls.
An Overview of Rumble Inc.
Rumble (RUM) is a video-sharing platform valued at $2.69 billion by market cap. The company operates rumble.com, a video-sharing and live-streaming platform similar to YouTube. Users can subscribe to channels and access video-on-demand, as well as live content streamed by creators.
Rumble also operates locals.com, where users can access free content and purchase subscriptions while accessing exclusive content in creator communities. Moreover, the Rumble Streaming Marketplace is a patent-pending application that enables live streaming and provides a monetization service for creators.
Founded in 2013, Rumble has gained popularity by marketing itself as an alternative to other mainstream platforms, including YouTube. It has appealed to conservative audiences who advocate free speech and provides a space for content creators who feel marginalized on other platforms.
The stock has several ties to the Trump trade, as Donald Trump established an official account on Rumble after finding himself de-platformed from other social media sites. Following the former president's election loss in 2020, the platform's user base exploded by 10 times in late 2020.
Rumble Stock Is Up 54% in 2024
Rumble is also backed by Peter Thiel and venture capitalist J.D. Vance, Trump’s vice presidential nominee. In fact, RUM stock surged 17% in the week following Vance’s addition to the GOP ticket, as the author has a stake of between $100,000 and $250,000 in the company.
More broadly, RUM is up more than 54% so far in 2024.
In Q1 of 2024, Rumble reported revenue of $17.7 million, down 1% year over year. It remains unprofitable, and ended Q1 with a net loss of $43.3 million. Moreover, Rumble reported a sequential decline in key metrics, including monthly active users (MAUs) and minutes watched per month.
Drilling down, the platform's MAUs fell from 67 million to 50 million in the three-month period. Additionally, a lack of high-profile events during the quarter caused the minutes watched per month to fall to 8.6 billion from 10.6 billion.
Wedbush Says This Election Could Be Different for Rumble
Investment firm Wedbush recently began covering Rumble with a “neutral” rating, and said it expects the social media platform to benefit from an “under-monetized user base” ahead of the U.S. elections.
In an investor note, Wedbush explained, “We think there is significant upside potential as Rumble (RUM) works to improve monetization on the platform and ARPU trends closer to more mature peers.”
Wedbush says that if Rumble can increase its annual revenue per user to $3, its annual ad sales would be 150% higher compared to 2023, given a monthly active user base of 50 million. The brokerage firm stressed that with the “crucial” November presidential elections on the horizon, Rumble is positioned to attract ad sales from conservatives in the next few months.
Rumble has increased its MAUs in previous election cycles, but those pops were soon followed by reversions lower in the following months. Wedbush believes improvements in the user experience and the addition of diversified content should help Rumble attract - and retain - a higher share of election-related users this time around.
Wedbush has a 12-month target price of $8 for Rumble, but says the stock could touch $11 in a bull case scenario - indicating an upside potential of about 60% from current levels.
On the date of publication, Aditya Raghunath did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
