LONGBOAT KEY, Fla. - Rumble (NASDAQ:RUM), a video-sharing platform, has initiated an antitrust lawsuit in partnership with another social media company against the World Federation of Advertisers (WFA) and advertising agency WPP (LON:WPP), along with its subsidiary GroupM Worldwide. The lawsuit, filed today in the U.S.
The legal action targets an initiative by the WFA known as the Global Alliance for Responsible Media (GARM), which established content standards for digital platforms seeking advertising partnerships. Rumble alleges that these standards have been used to unjustly exclude certain platforms from receiving ad revenue. The complaint also highlights GARM's influence, noting its affiliation with the six largest ad agency holding companies, including WPP.
Rumble's filing contends that the standards for brand safety set by these advertisers and agencies should be determined by the market, not by the exertion of market power, which they claim has been to the detriment of platforms, content creators, users, and the agencies' own clients who may be paying inflated prices for advertising due to the alleged collusion.
This lawsuit comes as the U.S. House Judiciary Committee is conducting an ongoing investigation into the matter. A staff report from July suggested that GARM's actions could be in violation of antitrust laws and pose a threat to American freedoms.
Rumble is seeking a court declaration that the defendants' actions are unlawful, a permanent injunction to prevent further such conduct, and is claiming damages, interest, and legal fees.
Based on a press release statement, Rumble, which aims to create an independent infrastructure for the internet, positions itself as a growing entity in the video platform and cloud services industry, advocating for a free and open internet. The company's legal move underscores its commitment to this mission and represents a significant challenge to established advertising practices within the digital media space.
Rumble Inc. has reported significant growth in its Q1 2024 earnings, with a notable increase in its user base to 50 million monthly active users. Despite a decrease in advertising revenues, the company's overall revenue for the quarter was $17.7 million. Rumble Inc. also announced the successful launch of two major projects, Rumble Cloud and Rumble Studio, with optimism about reaching breakeven by 2025.
In a recent development, Rumble Inc. has challenged the London Stock Exchange Group (LON:LSEG) over a calculation error that could lead to the company's exclusion from the Russell 3000 Index.
Finally, the company has secured strategic partnerships, launched the Rumble Advertising Center, and is expecting sequential revenue increases in Q2 2024. These are the recent developments in the company's operations.
InvestingPro Insights
In the wake of Rumble's (NASDAQ:RUM) aggressive legal stance against major players in the advertising world, it's worth considering the company's financial health and market position. Rumble, with a market capitalization of $1.67 billion, is navigating a challenging financial landscape. According to InvestingPro data, Rumble is trading at a high Price / Book multiple of 7.6, which suggests that the market values the company's assets quite optimistically relative to its book value.
InvestingPro Tips highlight both strengths and concerns for Rumble. The company holds more cash than debt on its balance sheet, which is a positive sign of liquidity and financial stability. Additionally, Rumble's liquid assets exceed its short-term obligations, indicating that the company is in a good position to cover its immediate liabilities. However, the tips also reveal that Rumble suffers from weak gross profit margins, which currently stand at a concerning -87.43%. This could be a reflection of the competitive pressures and investment requirements in the video-sharing platform sector.
Furthermore, Rumble's revenue has shown significant growth over the last twelve months, with an increase of 53.11%. This growth trajectory is a testament to the company's expanding user base and market reach. However, analysts are not expecting Rumble to be profitable this year, and the company has not been profitable over the last twelve months. This indicates that while Rumble is growing, it has yet to translate that growth into net profitability.
For readers interested in a deeper dive into Rumble's financials and future outlook, InvestingPro offers a comprehensive suite of tools and additional tips. Currently, there are six more InvestingPro Tips available for Rumble at https://www.investing.com/pro/RUM, providing investors with a more nuanced understanding of the company's financial position and potential investment risks.
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