DoubleVerify because of effective advertising
Today we have a very speculative idea: to take the shares of the digital advertising software manufacturer DoubleVerify Holdings (NYSE: DV) to capitalize on the favorable market conditions. Growth potential and duration: 16.5% in 14 months; 37% over four years.
Why shares can go up: there is a demand for the company’s services – and there are still some circumstances that indirectly favor it. How we act: we take stocks now at $ 31.74. When creating the material, sources that are not available to users from the Russian Federation.
We hope you know what to do and how the company makes money On the company’s stock exchange recently, from April 20. So the primary source of information on her will be her registration brochure. DoubleVerify makes digital media assessment and analytics software. The essence of DV’s activities is to help clients evaluate the profitability of advertising campaigns on the Internet.
91% of DV’s revenue comes from advertisers themselves to evaluate the effect of campaigns, and 9% are marketers who draw up analytical reports for clients based on the company’s software. DV’s clients are various companies such as Colgate-Palmolive, Ford, Mondelez, and Pfizer.
The prospectus does not provide a breakdown of revenue by region – it that the company has international operations, but its primary customers are in North America.
DoubleVerify has been down 27% since June. Now they cost $ 31.74 – slightly more expensive than at the IPO – $ 27. This is partly due to the company’s exorbitant price tag and partly because the company has a good aura.
The digital advertising market is increasing, mainly because it gnaws an increasing percentage of traditional advertising budgets: TV, radio, and paper media. According to the number of campaigns analyzed by its software, DV earns: the more campaigns run on the Internet, the more demand for its services.
And there will be more and more campaigns. It is suitable for both DV’s business and its quotes: the mass of retail investors will pump up everything that looks promising. Even P / E. DoubleVerify decided to break the unspoken rule of IT companies and became profitable.
Her P / E is relatively high – 661, but in general, the main thing is that she has it. Alone can attract enough investors to the stock. In the past quarter, the company suffered losses, but this was by one-time expenses associated with the IPO and is not related to the profitable core business.
Punish the cartel. Google changed the targeting rules has become a problem for many companies working in this area. DV is, in principle, ready for these changes, although this may increase its costs. But there is a slight chance that the US antitrust lawsuit against these plans by Google will come with success. This regulatory win could benefit DV by avoiding the costs associated with the higher costs of switching to a new advertising system.
The chances that the regulators’ lawsuit will with success seems to be quite weighty. In the United States, the idea of ”breaking technology giants on their knees so that they know their place” is growing in popularity so that the court may well side with the plaintiffs.
What can get It’s still expensive. The company estimates that spending on the digital advertising market in the world is $ 170 billion, and by 2023 this market will grow to 225 billion. DV is marketing software for evaluating the effectiveness of campaigns with a market capacity of 13 billion in revenues.
The company occupies about 2.18% of its market, but it stands at 38.4% of the market with its capitalization. Now DV is worth 17.6 of its annual revenue, which is unrealistic even by the standards of the American stock market. So you should be mentally prepared for the most robust volatility of these stocks. I forbid you to sell. The company’s charter contains rules that severely restrict the rights of minority shareholders.
The main problematic point: DV management can block a deal to sell the company to someone without a demand. It limits DV’s prospects of finding their simple IT happiness – attracting a buyer from large corporations to their overpriced, expensive business.
As a result, Shares can be taken now for $ 31.74. And then, there are two options: wait for $ 37, which was asked for shares back in September. I think we’ll have to wait 14 months here; wait for the historical maximum of these shares – $ 43.5. So here you should count on four years of waiting.
Usually, in the case of high-tech businesses, I recommend horizons of 10 years or more. However, in the case of DV, I will refrain: we still do not know how the global digital advertising landscape will change if Google changes its policy and whether such a change will take place. There are still too many unknowns here.
