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Imagine Owning RumbleON (NASDAQ:RMBL) And Trying To Stomach The 94% Share Price Drop

Simply Wall St

Over the last month the RumbleON, Inc. (NASDAQ:RMBL) has been much stronger than before, rebounding by 41%. But that is meagre solace when you consider how the price has plummeted over the last year. Indeed, the share price is down a whopping 94% in the last year. So the rise may not be much consolation. The real question is whether the company can turn around its fortunes.

We really feel for shareholders in this scenario. It's a good reminder of the importance of diversification, and it's worth keeping in mind there's more to life than money, anyway.

View our latest analysis for RumbleON

RumbleON wasn't profitable in the last twelve months, it is unlikely we'll see a strong correlation between its share price and its earnings per share (EPS). Arguably revenue is our next best option. Generally speaking, companies without profits are expected to grow revenue every year, and at a good clip. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.

RumbleON grew its revenue by 437% over the last year. That's well above most other pre-profit companies. So on the face of it we're really surprised to see the share price down 94% over twelve months. There's clearly something unusual going on here such as an acquisition that hasn't delivered expected profits. 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.

The graphic below depicts how earnings and revenue have changed over time (unveil the exact values by clicking on the image).

NasdaqCM:RMBL Income Statement April 15th 2020

We consider it positive that insiders have made significant purchases in the last year. Even so, future earnings will be far more important to whether current shareholders make money. This free report showing analyst forecasts should help you form a view on RumbleON

A Different Perspective

The last twelve months weren't great for RumbleON shares, which performed worse than the market, costing holders 94%. Meanwhile, the broader market slid about 3.5%, likely weighing on the stock. The three-year loss of 57% per year isn't as bad as the last twelve months, suggesting that the company has not been able to convince the market it has solved its problems. Although Baron Rothschild famously said to "buy when there's blood in the streets, even if the blood is your own", he also focusses on high quality stocks with solid prospects. 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. Case in point: We've spotted 5 warning signs for RumbleON you should be aware of, and 2 of them can't be ignored.

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.