Key Points
- Zeta Global Holdings’ share price fell following a short report of financial irregularities.
- Zeta Global Holdings’ share price is set to recover as management’s denial categorically refutes these claims.
- Analysts remain firm in their stance and expect the stock to rise 100%.
Zeta Global Holdings (NYSE: ZETA) The stock price fell sharply in November due to the short report. The report alleges financial irregularities and predatory business practices that appear to be unfounded. Outside legal counsel helped the company provide a detailed response that rebutted the allegations as self-serving misrepresentations and speculation. The bottom line is that this marketing-focused cloud provider is inherently reliable and trades at a discount.
The discount in Zeta Global Holdings shares is underlined by insider buying, which has stepped in to support the market not with money, but with sentiment. Insiders own a significant double-digit share of the stock and have no reason to buy the stock other than its value, scandal or not. Four insiders, including the CEO and CFO, bought shares, which was also significant since it was the first action of the year and the last was a sale.
Institutional activities are also revealing. Institutions own about 75% of the shares and have been buying them on the balance sheet since the IPO. The pace of purchases increased in 2024 and remained strong in the fourth quarter, with purchases exceeding sales by more than 2 times. Fund managers Vanguard and BlackRock are among the largest shareholders, but financial institutions are widely represented, providing a strong base of support. Recent big buyers include Geode Capital Management and State Street, which bought shares after the short report and hold nearly 2% each.
Zeta Global Holdings’ growth will accelerate in 2024
Zeta Global Holdings is a data-driven, omnichannel cloud services provider that provides enterprise marketing analytics and automation services. Its AI business will grow at double-digit rates in 2024, bordering on hypergrowth and outpacing consensus estimates for its growing customer base and deepening service penetration. The only bad news is that growth will slow to 20% next year, but forecasts are likely on the conservative side. The growth of artificial intelligence services is only at the beginning of a long game, and Zeta Global Holdings is well positioned to achieve this goal. Easing monetary, regulatory and fiscal policies are expected to create an economic tailwind in 2025 that will stimulate demand across the economy.
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Analysts remain firmly in favor of Zeta Global Holdings. The short report prompted one downgrade to Hold and one price target cut, offset by a recent price target upgrade from Canaccord Genuity. Canaccord waited for the company to issue a denial before making its move. The company raised its price target to $28, citing a “more comfortable” view of the business.
They say the company remains on solid footing and management is doing a good job of strengthening public opinion. Their efforts are not limited to purchasing shares for personal accounts, but include authorizing a buyback of the new company. The new authorization is worth $100 million and increases the existing stake to $114 million, representing a 2.4% stake. In terms of balance sheet, the company is well capitalized, has minimal debt and ultra-low leverage. At the end of the third quarter, total liabilities were less than 1x equity and 1x cash.
Technical forecast: Zeta Global Holdings falls to critical support level
Zeta Global Holdings’ price action is disgusting. Shares fell more than 50% to critical support levels around $18. This level coincides with the consolidation at the beginning of the year and may be strong enough to keep the market from falling further. In this scenario, ZETA’s share price could surge, potentially reaching the analysts’ consensus target of $38, which is 100% above the critical support level. Otherwise, this market may fall to new lows, which is unexpected. Consensus estimates that Zeta Global Holdings’ revenue and earnings growth will gradually accelerate through the end of the decade.
Experience
Thomas Hughes has been a writer for InsiderTrades.com since 2019.
Areas of Specialization
Technical analysis, S&P 500; retail, consumer, consumer staples, dividends, high yield, small cap, technology, economic data, oil, cryptocurrencies
Education
Associate in Culinary Technology
Past experience
Market watcher, trader and investor of numerous websites. Founded Passive Market Intelligence LLC to provide market research analytics.