On Thursday, Oppenheimer maintained its Perform rating on Rumble Inc. (NASDAQ:RUM), a video platform company, without specifying a new price target. The firm's analysis highlighted mixed results in the company's recent performance, noting that while monthly active users (MAUs) increased by 16% quarter over quarter, there was a decrease in engagement, with minutes watched declining by 2% over the same period.
This was attributed to Rumble's migration to a proprietary content network and YouTube's decision to stop automatic creator sync.
Rumble's revenue saw a 13% quarter-over-quarter increase but fell short of Oppenheimer's expectations by 28%. Despite this, the company's gross profit was $1 million above Oppenheimer's forecast, largely due to lower content costs, as content guarantees dropped to $106 million from $123 million in the previous quarter.
Management at Rumble has indicated positive developments from the introduction of a new advertising technology stack starting in March. Still, they do not anticipate these changes to affect revenue until the second quarter.
As a result, Oppenheimer has adjusted its revenue forecasts for Rumble, projecting a 27% year-over-year increase in 2024 and an 8% increase in 2025, down from previous estimates of a 107% increase in 2024.
The firm also revised its expectations for Rumble's EBITDA, predicting losses of $105 million in 2024 and $20 million in 2025, which is an improvement from the previously forecasted $51 million loss in 2025. The cumulative cash burn through 2026 is estimated at $190 million against a current cash balance of $218 million.
Oppenheimer's valuation of Rumble is based on 18 times the company's projected 2025 sales, in contrast to the lower sales multiples of peers Pinterest (NYSE:PINS) and Snap, which trade at 5.0 times and 3.5 times, respectively.
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