Some RumbleON (NASDAQ:RMBL) Shareholders Have Taken A Painful 86% Share Price Drop

It’s not a secret that every investor will make bad investments, from time to time. But it should be a priority to avoid stomach churning catastrophes, wherever possible. So we hope that those who held RumbleON, Inc. (NASDAQ:RMBL) during the last year don’t lose the lesson, in addition to the 86% hit to the value of their shares. That’d be enough to make even the strongest stomachs churn. We wouldn’t rush to judgement on RumbleON because we don’t have a long term history to look at. Furthermore, it’s down 68% in about a quarter. That’s not much fun for holders.

We really hope anyone holding through that price crash has a diversified portfolio. Even when you lose money, you don’t have to lose the lesson.

View 5 warning signs we detected for RumbleON

Because RumbleON made a loss in the last twelve months, we think the market is probably more focussed on revenue and revenue growth, at least for now. Shareholders of unprofitable companies usually expect strong revenue growth. Some companies are willing to postpone profitability to grow revenue faster, but in that case one does expect good top-line growth.

In the last twelve months, RumbleON increased its revenue by 1754%. That’s a strong result which is better than most other loss making companies. So the hefty 86% share price crash makes us think the company has somehow offended market participants. Something weird is definitely impacting the stock price; we’d venture the company has destroyed value somehow. What is clear is that the market is not judging the company on its revenue growth right now. Of course, investors do over-react when they are stressed out, so the sell-off could be unjustifiably severe.

You can see below how earnings and revenue have changed over time (discover the exact values by clicking on the image).

NasdaqCM:RMBL Income Statement, January 8th 2020
NasdaqCM:RMBL Income Statement, January 8th 2020

We like that insiders have been buying shares in the last twelve months. Even so, future earnings will be far more important to whether current shareholders make money. You can see what analysts are predicting for RumbleON in this interactive graph of future profit estimates.

A Different Perspective

While RumbleON shareholders are down 86% for the year, the market itself is up 27%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. The share price decline has continued throughout the most recent three months, down 68%, suggesting an absence of enthusiasm from investors. Basically, most investors should be wary of buying into a poor-performing stock, unless the business itself has clearly improved. It’s always interesting to track share price performance over the longer term. But to understand RumbleON better, we need to consider many other factors. For example, we’ve discovered 5 warning signs for RumbleON (of which 2 are major) which any shareholder or potential investor should be aware of.

RumbleON is not the only stock that insiders are buying. For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.