Zinger Key Points
- Rumble expects 25% YoY revenue growth in Q1, with a focus on expanding internationally and enhancing its crypto community presence.
- Analyst lowers Q1 estimates but highlights Tether's investment as key for scaling Rumble's ARPU and moving toward EBITDA breakeven.
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Wedbush analyst Scott Devitt reiterated the Neutral rating on Rumble Inc. RUM on Tuesday, lowering the price forecast from $13 to $10.
Yesterday, the company reported fourth-quarter sales of $30.20 million (+48% year over year), beating the analyst consensus estimate of $29.73 million. Average Revenue Per User for the fourth quarter was $0.39, compared to $0.33 in the third quarter, an increase of 18%.
For the first quarter, the company expects at least 25% revenue growth year over year.
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The analyst expresses optimism about Tether’s recent investment in Rumble. This investment will enable the company to focus on key initiatives.
Per Devitt, these initiatives include expanding internationally by leveraging Tether’s global presence.
It will also allow Rumble to onboard Tether’s portfolio companies to Rumble Cloud.
Additionally, the investment will enhance Rumble’s standing in the crypto community, particularly with the development of Rumble Wallet, the analyst writes.
Finally, the investment will support efforts to drive progress toward achieving adjusted EBITDA breakeven.
Devitt has revised their first-quarter estimates, reflecting more moderate expectations for ad revenue and user growth. The analyst now forecasts revenue of $23.6 million, a 33.1% year-over-year increase, down from the previous estimate of $30.2 million.
The adjusted EBITDA estimate has also been lowered to -$12.1 million, from -$7.0 million.
While the near-term outlook is reduced, the analyst writes that the company has a strong long-term opportunity to increase average revenue per user to match industry peers, while continuing to grow in the cloud business.
The analyst awaits further evidence of sustainable ARPU improvements and remains focused on user retention as election tailwinds wane.
Price Action: RUM shares are trading lower by 0.37% to $8.00 at last check Wednesday.
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