Following an assassination attempt on former President Donald Trump over the weekend, investors witnessed a rally in several so-called Trump trades on Monday. One such company that gained was Rumble (NASDAQ:RUM), a video-sharing platform that appeals to consumers interested in free speech and censorship-free content. RUM stock closed out Monday up by more than 20%.
With reelection odds for Trump climbing higher, it seems that investors are committing to these trades, creating an interesting narrative for Rumble. It is worth noting that the company also has a partnership with Truth Social, the social media platform under Trump Media (NASDAQ:DJT).
Now, savvy traders have a chance to make some money with RUM stock.
Financial Projections Might be Understated
Since November 2023, only three analysts have covered RUM stock. However, the assessment has been overall positive, with two buys and one hold.
As it stands right now, the financials appear modestly compelling. In the trailing 12 months (TTM), Rumble generated revenue of $81.08 million. By the end of fiscal 2024, analysts project that revenue may land at $97.36 million, up 20.3% from last year’s print of $80.96 million. By 2025, the top line may expand to $117.64 million, up 20.8%.
Currently, RUM stock trades at a trailing-year sales multiple of 14.74x. Assuming a shares outstanding count of 116.94 million, the multiple would drop down to 8.61x. That’s still high relative to the internet content and information sector, which runs an average multiple of 3.16x. However, with rising interest in its alternative video platform, Rumble could see even bigger revenue.
Trade of the Day: Buy RUM Stock Call Options
With the fundamentals and the financial projections so supportive of Rumble, it could potentially move higher. Yes, RUM stock gained nearly 21% on Monday. However, it could still rise in strength. Therefore, the Trade of the Day involves acquiring RUM call options.
The reason I’m fairly confident about the company’s prospects is that on Monday, RUM stock pinged as a J-Hook pattern candidate. The J-Hook is a four-sequence (up-down-up-down) chart pattern, with traders speculating that at the fourth checkpoint, the target equity will rise higher. It’s one of the most objective technical signals that Barchart provides, as the asset must meet nine criteria before qualifying as a legitimate J-Hook.
Given the very real possibility of continued upside, traders have multiple choices regarding call options. They can go for the 19 July 2024 $7.50 call, which would expire this Friday. With a “cheap” premium of $40 (40 cents multiplied by 100 shares), it could be attractive for extreme gamblers.
On the other end, traders can go as far out as the Jan. 16, 2026 expiration date. That gives traders ample room for the content-growth narrative to play out. However, the factor to consider here is that the premiums – especially for such a speculative idea – are quite expensive.
On the date of publication, Josh Enomoto held a LONG position in RUM stock. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.
