Summary
Culper Research has published a detailed investigative report analyzing Rumble Inc. (NASDAQ: RUM), a video platform claiming massive user base growth post its SPAC deal. The report questions the legitimacy of Rumble's reported monthly active users (MAUs) and highlights significant discrepancies with third-party data and internal practices.
Who is Rumble Inc.
Rumble Inc. is a video-sharing platform that went public through a SPAC transaction in September 2022, with an ambitious valuation of approximately $3 billion. It operates as a media platform that claims to empower content creators, positioning itself as an alternative to tech giants by emphasizing its infrastructure independence and proprietary data centers. The platform reports user engagement primarily through monthly active users across its web and mobile applications.
Key Points from Report
Inflated User Figures
- Rumble’s claimed growth from 1.6 million MAUs in Q3 2020 to 80 million in Q4 2022 contrasts sharply with third-party web traffic data estimating only 28.9 to 38.8 million unique web users and 9.5 million mobile app downloads, suggesting significant overstatement by 66% to 108%.
- Discrepancies appear when comparing Rumble to platforms like Twitch; despite claiming 57% of Twitch's MAU size, Rumble reports only 9% of Twitch's monthly hours watched and 10% of app downloads.
Unreliable Metrics and Internal Practices
- Rumble’s definition of MAUs is inconsistent, with recent disclosures admitting inability to accurately track unique users, leading to potential double-, triple-, or even quadruple-counting of single users with multiple devices.
- A former executive reported that Rumble counts each device as a unique user, causing inflated counts, which conflicts with market recognition and user awareness surveys showing very low familiarity with the platform nationally.
Operational and Governance Concerns
- Contrary to CEO claims of owning proprietary data centers, Rumble rents from third parties and relies on major cloud providers such as Amazon AWS, Google, IBM, and Apple for infrastructure and app distribution.
- Rumble’s advertising platform is rudimentary, lacking essential features such as pixel tracking, attribution, and robust targeting, which limits appeal to high-quality advertisers and results in reliance on niche or questionable advertisers.
- Financials indicate significant cash burn ($43 million) and negative gross margins, coupled with costly deals to attract high-profile creators, raising sustainability concerns.
- Leadership is dominated by friends and prior collaborators of CEO Chris Pavlovski, with limited experience relevant to scaling global media businesses, and the company is audited by a smaller firm, diverging from industry norms.
Activ8 Finance Analysis
The report by Culper Research surfaces critical discrepancies and concerns regarding Rumble Inc.'s user base claims, operational practices, and governance structure. The overstatement of key engagement metrics, combined with admissions of unclear measurement methodologies, could signal fundamental weaknesses in Rumble's business model and reporting transparency. Such inconsistencies complicate the ability to gauge Rumble’s market position and growth trajectory accurately.
Moreover, infrastructure dependencies on major cloud providers and a suboptimal advertising platform highlight operational challenges. The financial strain underscored by negative margins and cash burn further adds to these concerns. Together, these factors suggest a need for cautious scrutiny by stakeholders and market participants when evaluating the company’s stated performance and prospects.