1. Cardlytics, Inc. (NASDAQ:CDLX)
Short Interest: 17.31%
Number of Hedge Fund Holders: 19
Cardlytics (NASDAQ:CDLX) operates a digital advertising platform within its partners and its own digital channels. These include mobile applications, online, email, and various real-time notifications. The Cardlytics platform allows marketers to deliver advertising content to customers and earn rewards, funded with a portion of the fee collected from them. The platform equips marketers to reach their potential customers across a wide array of financial institutions (FI) partners through their digital banking accounts.
The company also operates Bridg, a customer data platform that leverages point-of-sale (POS) data (including product-level purchase data) to enable partners to perform analytics and targeted loyalty marketing. Marketers can also calculate the impact of their marketing. Cardlytics (NASDAQ:CDLX) operates in the United States and the United Kingdom.
Cardlytics (NASDAQ:CDLX) is continuing to make progress across the new technology releases in three areas: the adoption and refinement of its Ad Decisioning Engine (ADE), the launch of its Automated Insights Dashboard, and the launch of its Dynamic Marketplace. 80% of the company’s banks are already onboard ADE, with continued progress in transitioning the rest. In addition, the Automated Insights Dashboard allows advertisers to access on-demand insights. This launch is expected to increase the overall billing opportunity as spend thresholds are required for access, and enables advertisers to take real-time action. The Dynamic Marketplace includes a transition to its engagement-based pricing model. These interventions are expected to appeal to advertisers, helping the company solidify its market standing.
Cardlytics’ (NASDAQ:CDLX) growth plans bring optimism to the company. These include a strengthened financial profile to reduce operating expenses, improve capital structure, and facilitate continued strategic business investments. It also holds clear plans to align its offerings with the modern advertising market, increasing consumer incentives and billings. In addition, the company is taking proactive steps to address its challenges. These include delivering an improved monetization value to its buyers, brands, and banks. The starting point to address such challenges for the company is improving delivery, forecasting, and pricing while simultaneously delivering a platform that exceeds advertiser expectations and needs.
The company is making solid progress in growing its engagement. Consumer incentives rose by 25% in Q2, which shows that consumers are finding value in the company’s offerings. These engagement-driven initiatives are expected to attract more marketing budgets to the platform, adding to its flywheel effect.
Cardlytics’ (NASDAQ:CDLX) has considerable expansion and growth plans in place. It holds a competitive market edge due to its unrivaled first-party purchase data, with cardholders’ spending data ranking as the best predictor of its future and making it valuable for advertisers. It is thus running on a flywheel effect of brands, buyers, and banks, increasing its customer base of cardholders with rewards and, in turn, driving incremental spending for advertisers and banks.
Overall, CDLX ranks first among the 10 worst advertising stocks to buy now. While we acknowledge the potential of advertising companies, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than CDLX but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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