Why Rumble Stock Is Falling Today

Rumble (NASDAQ: RUM) stock is falling in Monday's trading. The streaming-video company's share price was down 9.3% as of 1:30 p.m. ET. Meanwhile, the S&P 500 index was down 0.7%, and the Nasdaq Composite index was down 0.8%.

The broader market is facing pressures today as investors take year-end profits and sell stocks for tax purposes. In addition to this bearish catalyst, Rumble stock is also facing a reversal of the positive meme-stock momentum it had been seeing.

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Rumble tumbles as 2024 winds down

Today is the second-to-last trading day in 2024, and investors are taking profits on this year's winners and selling losers for tax-harvesting purposes. Along with relatively thin trading volume, this is prompting a pullback for the broader market.

Rumble stock is seeing a particularly pronounced pullback following a recent bullish surge. On Dec. 20, Rumble published a press release announcing that it had formed a deal to receive $775 million in investment from Tether -- the company behind the Tether cryptocurrency that is designed to trade at a roughly 1-to-1 ratio with the U.S. dollar.

The news kicked off a massive rally for Rumble stock, and its share price is up 91% over the last month even with today's pullback. But while the streaming specialist's valuation is still up big, its bullish meme-stock momentum may be fading.

What's next for Rumble stock?

With Rumble's market cap at roughly $3.9 billion, Tether's $775 million investment is substantial. On the other hand, only $250 million of the proceeds from the deal will wind up going toward funding Rumble's business operations and new growth bets. The remainder is intended to go toward buying back stock from other large shareholders at a price of $7.50 per share -- the same price that Tether will be buying new shares of Rumble stock.

RUM PS Ratio (Forward) data by YCharts

Even with today's pullback, Rumble is valued at more than 40 times this year's expected sales. Some investors appear to be betting that Tether will steer the company to be more focused on cryptocurrencies or that meme momentum can spur more big rallies for the stock, but the company's highly growth-dependent valuation makes that a risky proposition.

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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.