On Thursday, B.Riley reaffirmed its Buy rating and $44.00 price target on Zeta Global Holdings Corp (NYSE:ZETA), despite the stock's significant decline over the past two trading sessions. The technology company's shares plummeted nearly 52%, in stark contrast to the Russell 2000 Index's 2.7% dip, following its third-quarter earnings report and updated full-year guidance, which were detailed in a research update on November 11.
Zeta Global has responded to recent market turbulence by emphasizing the reliability of its financial practices. The company has reassured investors of its adherence to Generally Accepted Accounting Principles (GAAP) in revenue recognition, with its auditor Deloitte confirming the integrity of its financial statements and internal controls for the fiscal year 2023. Contrary to a short-seller report's claims, Zeta also clarified that it does not engage in 'consent farms' and has invested significantly in data protection and privacy to comply with legal standards.
The company addressed specific points raised by the short-seller report, noting that revenue from acquisitions Apptness and ArcaMax represented less than 3% of year-to-date revenue in fiscal year 2024, which is under $30 million compared to the $300 million+ suggested in the report. These acquisitions also contribute to less than 1% of Zeta's total data assets.
In a move to showcase confidence in its business strategy and future prospects, Zeta Global announced the initiation of a new $100 million share repurchase program. This new buyback plan is in addition to the $14.7 million remaining from its existing repurchase program.
B.Riley's analysis suggests that the recent sell-off in Zeta Global's shares is an exaggerated response to a speculative short-seller report that contains numerous inaccuracies and misrepresentations, with financial metrics that are reportedly off by hundreds of millions of dollars.
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