Zeta Global (ZETA) stock has suffered a harsh reversal as it fell for two consecutive weeks. It has dropped by over 23% from its highest level this year, meaning that it has moved into a deep bear market. This retreat has led to a big drop of its market cap to $6.17 billion.
What is Zeta Global?
Zeta Global is a leading technology company in the marketing vertical. Its business provides the Zeta Marketing Platform (ZMP) that combines data, analytics, and artificial intelligence to deliver personalized marketing experiences.
The Zeta Data Management solution brings key systems in a company in one single platform. For example, through its dashboard, one can see the number of visitors to a website, number of email subscribers, social media users, and active phone contacts. Zeta Global also has messaging and activation tools.
Zeta Global is not a popular brand among American consumers because it mostly offers its services to companies, agencies, and publishers. Some of its top customers are companies like AT&T, Toyota, Estee Lauder, and Comcast.
According to its website, Zeta Global has over 12.7 billion unique global identifiers and 1 trillion content signals each month. It also reaches over 235 million people in the United States.
It also helps companies to acquire customers and retain them. Its other solutions are data and identity, omnichannel marketing and agile intelligence.
Why ZETA shares have surged
Zeta Global has been one of the best-performing companies in Wall Street as its stock jumped by over 720% from its lowest point in 2022 and its highest level this year.
Most of this growth happened because the company has embraced the artificial intelligence technology. It uses AI and big data technology to ensure companies acquire and retain customers.
Most AI companies like Palantir and NVIDIA have jumped sharply this year as the industry went viral.
At the same time, Zeta’s business has continued growing, both organically and through acquisitions. Its annual revenue rose from $306 million in 2019 to over $728 million in the last financial year.
This revenue growth will likely continue following its decision to acquire LiveIntent, a solution that will enhance its identity resolution capabilities, expand into publisher monetization, and elevate its mobile and retail media solutions.
Zeta Global spent $250 million for the acquisition. These funds were in the form of $77.5 million in cash on hand and $172.5 million in stock.
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Strong earnings trend
Zeta Global stock has also jumped after the company announced solid financial results and thereafter increased its forward guidance.
The most recent results showed that its revenue rose by 33% YoY in the second quarter to $228 million. This growth happened as the scaled customer account rose by eight to 468 during the quarter and its average revenue per active user (ARPU) jumped 22% to $479,000. It has had over 20% revenue growth for 14 consecutive quarters.
Zeta Global also hinted that it will get to its 2025 revenue target of $1 billion ahead of schedulr. Also, it will get to its adjusted EBITDA of $200 million and its free cash flow of $110 million.
In a recent statement, the company upgraded its revenue guidance for the third quarter to $255 million. Before that, it had hinted that its revenue will be $239.2 million.
This revenue growth is mostly because of the ongoing political campaign, where it has become a leading player in targeting. It expects that its revenue guidance from political candidates to be at least $10 million.
Zeta Global has a good record of beating analysts estimates, meaning that its results will be better. Its earnings will come out on November 11.
Analysts have mixed opinions on the company. Those at Keybanc expects that its revenue growth will continue, and that it will turn a profit soon. However, Barclays downgraded the company citing a challenging growth outlook. All in all, Zeta Global’s target by analyst is $36, higher than the current $26.13.
Zeta Global stock analysis
Zeta chart by TradingView
On the daily chart, we see that the Zeta Global stock price peaked at $34.10 in October and formed a shooting star pattern, which explains why it has retreated sharply since then.
The decline is because the company raised $204 million by selling shares, a move that diluted existing shareholders.
Also, there is profit-taking going on since existing shareholders have been highly rewarded over time.
On the daily chart, the Zeta Global stock has dropped slightly below the 50-day Exponential Moving Average. It remains above the 100-day MA, which is a positive sign.
Zeta Global’s Relative Strength Index (RSI) has moved below the neutral point at 50, while the MACD indicator has pointed upwards. I believe that the stock will bounce back, retest the all-time high at $34, forming a double-top pattern, and then resume the downtrend.
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