We came across a bullish thesis on Taboola.com Ltd. (TBLA) on Twitter by Hoss. In this article, we will summarize the bulls’ thesis on TBLA. Taboola.com Ltd. (TBLA)’s share was trading at $3.58 as of Jan 15th. TBLA’s forward P/E was 44.84 according to Yahoo Finance.
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Taboola (TBLA) is a performance advertising technology company focused on connecting advertisers with consumers through its partnerships with publishers and innovative ad solutions. Unlike AppLovin (APP), which focuses on gaming, TBLA derives 10% of its revenue from publishers and 90% from performance advertisers. In recent years, the company has significantly expanded its publisher partnerships, creating a robust supply pipeline, and is now prioritizing growing advertiser demand. Recent milestones include the transformative 30-year Yahoo partnership, where Taboola took over Yahoo’s publishing and performance ad business, gaining access to major advertisers like Hulu and Verizon. This partnership alone represents a $1 billion revenue opportunity as TBLA works to expand advertiser spend not only within Yahoo but across its entire platform.
To capitalize on this, Taboola has increased its sales force, aiming to boost advertiser engagement and leverage its data to enhance return on ad spend for advertisers, publishers, and itself. The company’s shift toward being recognized for performance advertising, rather than just publishing, strengthens its ability to attract additional advertisers, including app developers. The increasing traction of its proprietary TBLA News platform, with 2 million daily users, further solidifies its relationships with publishers, enhancing its market position.
CEO and founder Adam Singolda, who has led the company for 17 years, ensures stability and vision. Insider ownership is strong, with Yahoo holding a significant 25% stake, reflecting confidence in the business’s long-term potential. Additionally, TBLA has actively repurchased shares above current prices, underscoring management’s belief in its undervaluation. Financially, the company is robust, with a net cash-positive balance sheet, a 2024 EBITDA forecast of $200M, and attractive valuation multiples of 6.75x EV/EBITDA and 12.8x EV/FCF.
Risks include Google AI potentially reducing traffic to TBLA’s publishers and the possibility of new competitors like APP entering its e-commerce niche, though these threats are currently mitigated. Management remains confident in 20% annual growth, supported by strong fundamentals, strategic partnerships, and a compelling growth trajectory, making TBLA a highly attractive investment opportunity.
Taboola.com Ltd. (TBLA) is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 27 hedge fund portfolios held TBLA at the end of the third quarter which was 32 in the previous quarter. While we acknowledge the risk and potential of TBLA as an investment, our conviction lies in the belief that some 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 TBLA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article was originally published at Insider Monkey.