Can you feel the ground moving beneath your feet? Shares of Taboola (TBLA) skyrocketed nearly 19% today after the advertising service provider delivered second-quarter results that beat Wall Street’s expectations.
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Taboola provides open web recommendations against the likes of walled garden advertising offerings of Google, Amazon, and Facebook. TBLA stock has lost a whopping 60% so far this year.
Despite the challenging macroeconomic environment, Taboola has been able to maintain solid long-term exclusive publisher partnerships and performance advertiser success. Moreover, the company is gaining new publisher signings and winning hearts with innovative product launches.
Taboola Q2 Results
Taboola posted adjusted earnings of $0.06 per share, beating the analyst’s estimated loss of $0.08 per share. However, the figure was lower than the prior-year quarter’s figure of $0.09 per share.
Similarly, the revenue of $342.69 million rose 4.1% year-over-year, outpacing analyst estimates by $6.94 million.
Notably, the company’s ex-TAC gross profit jumped 22.5% to $143.21 million in Q2. Ex-TAC gross profit represents the company’s revenue minus traffic acquisition costs (TAC). TACs are payments made by online search companies to affiliates for directing traffic to their websites and form one of the major expenses for them.
Taboola’s Q3 & FY22 Guidance Lags Expectations
Based on the current business momentum and macro environment, Taboola gave the following outlook for the third quarter and revisited guidance for Fiscal 2022.
For Q3, TBLA expects revenue to fall between $311-$331 million, while the consensus is pegged higher at $369.17 million.
Furthermore, Q3 ex-TAC gross profit is expected between $120-$130 million, and an adjusted net loss between $8-$2 million is expected.
Meanwhile, for the full year of Fiscal 2022, TBLA slightly lowered its revenue expectations from its earlier guide. The company now expects FY22 revenue to fall in the range of $1.434-$1.474 billion, while consensus is pegged higher at $1.51 billion.
FY22 ex-TAC gross profit is expected to be in the range of $595-$615 million, and adjusted net income between $83-$91 million.
What is Taboola’s Stock Prediction?
On TipRanks, TBLA stock has a Moderate Buy consensus rating based on five Buys and two Holds. The average Taboola.com price forecast of $6.92 implies a massive 161.1% upside potential to current levels.
Hedge funds, too, seem to be optimistic about TBLA stock. TipRanks’ Hedge Fund Trading Activity tool shows that confidence in Taboola.com is currently Positive, as three hedge funds increased their cumulative holdings of TBLA stock by 423,100 shares in the last quarter.
Is Taboola a Good Buy?
Taboola is winning newer publisher signings and launching innovative products to attract higher traffic. Despite the industry’s current lull in advertising demand, Taboola has managed to surpass expectations. Plus, Taboola has an impressive upside potential for the next twelve months, making the stock an attractive investment opportunity.
