What Happened: Shares of advertising and marketing company Zeta Global (NYSE:ZETA) jumped 21.8% in the morning session after the company reported first-quarter results that blew past analysts' billings, adjusted EBITDA, and free cash flow expectations. Notably, the company highlighted strengths in the number of scaled-up customers (from the $100,000 to $1 million cohort), leading to strong ARPU (average revenue per user) growth. Looking ahead, next quarter's revenue guidance came in higher than Wall Street's estimates. On the other hand, its new large contract wins slowed. Overall, we think this was a strong quarter that should satisfy shareholders.
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What is the market telling us: Zeta's shares are very volatile and over the last year have had 15 moves greater than 5%. But moves this big are very rare even for Zeta and that is indicating to us that this news had a significant impact on the market's perception of the business.
The biggest move we wrote about over the last year was about 1 month ago, when the company gained 16% on the news that Morgan Stanley upgraded the stock's rating from Equal Weight (Hold) to Overweight (Buy) and raised the price target from $12 to $17. The new price target represents a potential 45% upside from where shares traded when the upgrade was announced. The analyst explained the reason for the improved rating, adding, "We see additional catalysts with third-party cookie-deprecation driving demand and investor interest, conservatism in guidance and 2025 targets, and reduced overhang from private equity ownership."
Zeta is up 81.2% since the beginning of the year. Investors who bought $1,000 worth of Zeta's shares at the IPO in June 2021 would now be looking at an investment worth $1,712.
