Digital advertising platform Perion Networks (NASDAQ: PERI)
stock has been riding the surge in social media traffic and e-commerce
accelerated by the pandemic
. Its propriety social marketing platform simplifies media buying for marketers and advertisers across all the major social media platforms
including Facebook Instagram (NYSE: FB)
, Twitter (NYSE: TWTR)
, Snapchat (NYSE: SNAP)
and Pinterest (NYSE: PINS)
. The business has been thriving as the Company raised its guidance three times. The Company has been growing both organically and through acquisitions which prompted secondary offerings to fuel to the strategy. Shares have nearly doubled since the start of 2021. Prudent investors seeking exposure can watch for opportunistic pullback levels.
Q4 FY 2020 Earnings Release
On Feb. 9, 2021, Perion released its fiscal fourth-quarter 2020 results for the quarter ending December 2020. The Company reported earnings-per-share (EPS) profits of $0.30 beating analyst estimates by $0.12. Revenues rose 51% year-over-year (YoY) to $118.26 million, beating analyst estimates by $6.8 million. Average Daily Traffic Search grew 32% YoY to highest ever at 15.7 million. Net cash grew 14% YoY to $12.8 million. CTV revenues grew 132% YoY to $6.5 million. Display and social advertising grew 159% YoY to $68.4 million.
Conference Call Takeaways
Perion CEO, Doron Gerstel, set the tone, “From a capital position, we have bolstered and de-leveraged our balance sheet. We completed the successful follow-on offering of $61 million three weeks ago, position Perion to continue to capitalize on the growth opportunities in front of us…. We accomplished all this in the face of the global pandemic market by unparalleled volatility, disruption and change across the evolving digital media industry and ad-tech ecosystem.” CEO Gerstel also pointed out the “sudden decline of travel and hospitality industry”, which accounted for 15% of its 2019 revenues. In summary, there are three trends that were accelerated by the 2020 pandemic that fit right into the core of Perion’s offerings. First, the struggle for attention that brands are competing for. Secondly, the struggle for publishers to generate revenues. Third, the acceleration of search as consumers buying increases from search results.
The New Consumer Normal
CEO Gerstel summed it up, “The macro context behind these trends is a massive shit in behavior as consumers are spending an increasing amount of time online, including but not limited to shopping. They are turning to digital sources for sports and entertainment and news consumption as well as a new platform like CTV. This was before the pandemic, but it has dramatically accelerated. The consumers are social distancing and spending more time at home.” Advertisers are adjusting their digital advertising budgets based on shits in which platforms are winning the war for attention.
The Company renewed its Microsoft Bing (NASDAQ: MSFT) extension for an additional four years adding to its decade-long relationship. Perion added geographics and new collaborative features, “at even more favorable terms”. The new Bing agreement is estimated to generate an additional $800 million in revenues in the next four years. While Perion’s share price seems expensive, it’s actually cheaper valuation-wise to its peers The Trade Desk (NASDAQ: TTD) and Magnate (NASDAQ: MGNI). Prudent investors looking for the exposure it ad-tech can watch shares of Perion on pullbacks.
PERI Opportunistic Pullback Levels
Using the rifle charts on the monthly and weekly time frames provides a broader view of the playing field for PERI shares. The monthly rifle chart has a double-barrel pup breakout composed of a moving average (MA) pup breakout with a rising 5-period moving average (MA) trying to catch up at $12.94 and upper Bollinger Bands (BBs) at $18.86. The monthly stochastic is powering higher with a stochastic mini pup. The weekly rifle chart has a rising 5-period MA at $16.96 and upper BBs just below the $23.48 Fibonacci (fib) level. The weekly stochastic triggered a mini pup as it also grinds higher. The parabolic price spike may be forming a weekly spinning top as the daily rifle chart formed a market structure high (MSH) trigger under $22.27. An MSH is the inverse version of the market structure low (MSL)buy trigger. Prudent investors can monitor opportunistic pullback levels at the $18.48 fib, $17.64 sticky 2.50s level, $16.29 fib, $15.30 sticky 5s level, and the $13.48 fib. The upside trajectories range from the $25.94 fib to the $33.65 fib.
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