We came across a bullish thesis on Taboola.com Ltd. (TBLA) on Value Investing Subreddit Page by Dependent-Leg4638. In this article, we will summarize the bulls’ thesis on TBLA. Taboola.com Ltd. (TBLA)’s share was trading at $2.84 as of March 7th. TBLA’s forward P/E was 70.92 according to Yahoo Finance.
Small business owners with their laptops sitting at a coffee shop, discussing their digital advertising strategy.
Taboola is a global advertising technology company specializing in content recommendations and native advertising. The company creates ads on platforms like Yahoo that appear as articles but are sponsored, a format that has faced headwinds due to a downturn in native advertising. This has resulted in Taboola trading at extremely low multiples relative to its earnings potential, making it an attractive investment opportunity. Currently, the company has $227 million in cash and approximately $150 million in debt, leading to an enterprise value of around $870 million based on its current market capitalization. In 2024, Taboola generated $201 million in EBITDA and $150 million in free cash flow, meaning it is trading at just 4.5 times EBITDA and 5 times FCF—an exceptionally low valuation, especially when compared to competitors like Outbrain, which trades at 11 times EBITDA.
This valuation disconnect presents a compelling investment case, further strengthened by multiple catalysts that could drive a significant rerating of the stock. One major catalyst is the company’s newly approved $200 million share buyback program, which will meaningfully reduce the share count and enhance per-share earnings, making the stock even more attractive at current levels. Another key development is the launch of Realize, a new product that expands Taboola’s offerings beyond traditional article-based ads into a broader range of advertising formats. Realize simplifies the entire advertising process, making it easier for advertisers to engage with Taboola’s platform and potentially driving increased adoption.
With these catalysts in place, Taboola’s stock is poised for a potential revaluation as the market recognizes its strong cash flow generation, undervaluation relative to peers, and strategic growth initiatives. The buyback program should provide immediate support to the stock price, while Realize offers a long-term growth opportunity that could drive revenue expansion and improve margins. Given the combination of a low valuation, strong cash flow, and meaningful catalysts, Taboola represents a unique investment opportunity with a favorable risk-reward profile.
Taboola.com Ltd. (TBLA) is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 28 hedge fund portfolios held TBLA at the end of the fourth quarter which was 27 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.