4. Taboola.com (NASDAQ:TBLA)
Upside Potential: 57.37%
Market Cap: $1.17 Billion
Taboola.com (NASDAQ:TBLA) was founded in Israel and is a global leader in content discovery and native advertising. The company’s platform connects advertisers with a vast audience through personalized content recommendations on top publisher websites. Taboola.com (NASDAQ:TBLA) has 600 million daily active users and strategic long-term contracts with tech giants such as Apple and Yahoo.
Taboola.com (NASDAQ:TBLA) operates an AI-driven recommendation engine that powers personalized content recommendations across the open web, outside major platforms like Meta and Google. This model has proven successful in driving user engagement and monetization, making Taboola.com (NASDAQ:TBLA) a critical player in the digital advertising sector. The company’s revenue is primarily derived from advertisers who pay for user engagement, such as clicks or conversions, on ads placed through Taboola.com’s (NASDAQ:TBLA) platform.
On July 16, Taboola.com (NASDAQ:TBLA) entered an exclusive agreement with Apple, to integrate native advertising into Apple News and Apple Stocks apps. This agreement has strengthened Taboola.com’s (NASDAQ:TBLA) standing in the digital advertising space and has positioned the company as an authorized advertising reseller for Apple. Native advertising, which involves creating ads that seamlessly blend with the content on the platform, will now be featured within the feeds and articles of select publishers on these Apple apps.
Earlier in 2023, Taboola.com (NASDAQ:TBLA) scored a 30-year agreement with Yahoo, which helped the company to access Yahoo’s vast digital properties, which collectively attract nearly 900 million monthly active users across various platforms, including Yahoo Mail, Sports, Finance, and News. This deal allows Taboola.com (NASDAQ:TBLA) to leverage its extensive network of over 9,000 publisher partners and 500 million active users daily to offer brands unparalleled scale in reaching consumers within Yahoo’s trusted editorial environments.
The 30-year partnership with Yahoo could support Taboola.com (NASDAQ:TBLA) to generate over $1 billion in annual revenue. The company’s expansion into premium digital assets through Taboola Select, including platforms like Apple News and Microsoft properties, further strengthens its market position. These partnerships not only diversify Taboola’s revenue streams but also enhance its ability to attract high-profile advertisers looking to reach premium audiences. Despite its strong business model and strategic partnerships, Taboola.com’s (NASDAQ:TBLA) stock is currently undervalued, trading 10.40 times its earnings, which is a 22% discount compared to the sector median of 13.37.
In the year 2023, Taboola.com (TBLA) generated a revenue of $1.43 billion up 13% from the previous year, and EBITDA stood at $98.7 million. The company’s forecast for 2024 includes revenue growth of 33%, with an expected Adjusted EBITDA of over $200 million. This outlook suggests a significant upside potential, especially as the company integrates its new partnerships and expands its reach. In the second quarter,Taboola.com’s (TBLA) stock was held by 31 hedge funds with stakes worth $41.29 million. Lakewood Capital Management is the largest shareholder in the company with a stake worth $4.9 million as of June 30. Industry analysts have a consensus on the stock’s Buy rating, setting an average share price target at $5.50, which represents a 57.37% upside potential from its current level.
