Why Rumble Stock Is Sinking Today

Rumble (NASDAQ: RUM) stock is falling in Wednesday's trading following the company's recently published quarterly results. The streaming specialist's share price was down 12.5% as of 11 a.m. ET.

Rumble published third-quarter earnings results after the market closed yesterday, posting sales and earnings that fell short of Wall Street's expectations. The company posted a loss of $0.15 per share on revenue of $25.06 million in the quarter, missing the average analyst estimate's call for a per-share loss of $0.13 on revenue of $29.25 million.

Rumble's Q3 performance missed the mark

Rumble's sales rose 39.2% year over year in the third quarter, but the growth still put the business's performance significantly short of the average Wall Street target for the quarter. Margins were also worse than anticipated, leading to a larger-than-expected loss in the period.

Rumble closed out the third quarter with 67 million average monthly active users (MAUs), up from 53 million average MAUs in the preceding quarter and 58 million MAUs in Q3 last year. The gains were likely aided by interest surrounding recent U.S. elections. Meanwhile, average revenue per user came in at $0.33 in Q3 this year, down from $0.37 in Q2.

What's next for Rumble stock?

Despite today's pullback, Rumble stock is still up roughly 9% over the last month. The company gained ground over election season and was viewed by some investors as a way to profit off of a victory for Donald Trump in the presidential race. With the election now concluded, that bullish catalyst appears to be receding for Rumble -- and focus appears to be shifting back to the underlying fundamentals of the business. There are some significant causes for concern on that front.

While Rumble will likely see continued engagement tied to election season in Q4, the company's growth last quarter looks underwhelming on key fronts. Despite the election-season backdrop, the young streaming platform's average MAUs increased just 15.5% year over year in the third quarter. Making matters worse, monetization per user dropped on a sequential quarterly basis in the period despite moving closer to election day.

With a market cap of roughly $1.7 billion, Rumble is valued at approximately 16 times this year's expected sales. While the company is growing sales at a relatively fast pace, the business is posting substantial losses -- and engagement metrics are not encouraging. Even after significant sell-offs today, the stock still looks risky.

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Keith Noonan 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.