On Thursday, Zeta Global Holdings Corp (NYSE: ZETA) shares received a reiterated Buy rating and a $43.00 price target from Needham. This affirmation comes in the wake of a significant drop in Zeta's stock price, triggered by the publication of a short report. The report accused Zeta of inflating its revenue growth through dubious practices with data partners and engaging in predatory consumer data collection.
The company's stock experienced a sharp decline on Wednesday after the short report's claims surfaced. The allegations pointed to supposed revenue manipulation through "round tripping" on contracts and the collection of consumer data through "consent farms." In response to the precipitous stock sell-off, Zeta Global's management issued a statement refuting the allegations.
Zeta Global's management addressed the concerns by denying the use of consent farms and clarified the revenue and data contributions from Apptness and ArcaMax. They emphasized the rigorous nature of their internal audit processes. Moreover, they highlighted that Deloitte, their official auditor, had provided a clean audit of their financial statements for the fiscal year 2023.
Needham's analyst noted the company's comprehensive response and expressed the belief that the market reaction was excessive. The firm maintains its position, encouraging investors to capitalize on the current weakness of Zeta's shares.
In other recent news, Zeta Global Holdings Corp has been making significant strides in its financial performance. The company reported a 42% year-over-year increase in Q3 2024 revenue to $268 million and a 59% rise in adjusted EBITDA to $54 million. This strong performance led to an upward revision of its full-year 2024 revenue outlook to $986 million, indicating a 35% growth from the previous year.
KeyBanc Capital Markets recently downgraded Zeta Global from Overweight to Sector Weight due to short-term market dynamics, despite acknowledging the company's ongoing fundamental strengths.
In contrast, Craig-Hallum increased its price target for Zeta Global, highlighting the company's AI and sales force expansion. Truist Securities also raised its price target following strong Q3 results, while Oppenheimer maintained an Outperform rating, projecting steady 20% organic growth.
These recent developments reflect the growing recognition of Zeta Global's robust financial performance and potential for future growth. As the company continues to focus on strategic acquisitions, key contracts, partnerships, and AI-driven marketing solutions, it will be interesting to see how these efforts translate into future financial results.
InvestingPro Insights
In light of the recent short report and subsequent market reaction, InvestingPro data provides additional context to Zeta Global's financial situation. Despite the recent turmoil, the company has shown strong revenue growth, with a 41.97% increase in quarterly revenue as of Q3 2024. This aligns with one of the InvestingPro Tips, which indicates that analysts anticipate sales growth in the current year.
However, it's worth noting that Zeta's stock has indeed taken a significant hit, with a 48.13% decline over the past week and a 42.82% drop over the last month. This volatility is consistent with another InvestingPro Tip, which suggests that the stock generally trades with high price volatility.
Despite these short-term challenges, Zeta's long-term performance remains positive, with a 107.96% price total return over the past year. This impressive return is highlighted as one of the InvestingPro Tips, suggesting that the company has shown strong performance over a longer time horizon.
For investors seeking a more comprehensive analysis, InvestingPro offers 12 additional tips for Zeta Global, providing a deeper understanding of the company's financial health and market position.
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