What happened
Week to date, shares of Rumble(NASDAQ: RUM) were down 11.9% through Thursday's market close, according to data provided by S&P Global Market Intelligence.
The video streamer's second-quarter earnings report revealed a wider net loss than expected. Improving monetization of users is growing revenue, but investors are still waiting for Rumble to prove it can sustain profitable growth. This is why the stock is down 57% since the company went public last year.
So what
Rumble reported a 468% year-over-year increase in revenue for the second quarter. The platform has been successful in bringing new creators to the platform to attract viewers, especially in markets known to attract young viewers, such as gaming, culture, and lifestyle. This has bolstered the company's monetization efforts with advertising.
Engagement is trending in a positive direction, with minutes watched per month up 46% to 11.8 billion. This followed a 48% increase in hours of uploaded video per day.
The content strategy is working to grow revenue, which is important, but one problem is a lack of growth in users. Monthly active users were 44 million in the quarter, down from 48 million in the first quarter.
Management blamed the dip on the recent slowdown in news and political coverage but also credited increased competition, which is a red flag.
Now what
Rumble is making progress to bring content to the platform that resonates with a younger audience. This is a valuable demographics to advertisers. Rumble can use that to its advantage to grow ad spending.
However, these efforts will only take the company so far until it grows monthly active users and profits. Costs of hosting and content was $40.8 million in the quarter, well above the $24.9 million in revenue. This led to a loss of $0.15 per share compared to $0.03 in the year-ago quarter. Rumble will need to turn that around to send the stock higher.
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John Ballard has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
