Zeta Global Holdings' (NYSE: ZETA) stock price decreased sharply in November because of a short report. The report alleges financial misconduct and predatory business practices that appear to be unfounded. External counsel assisted the company’s detailed response, which refuted the claims, calling them self-serving misrepresentations and speculative conjecture. The takeaway is that this marketing-focused data cloud provider is fundamentally sound and trading at a discount.
The discount in Zeta Global Holdings shares is highlighted by insider buying, which stepped in to support the market not with money but sentiment. The insiders own a substantial double-digit portion of the shares and have no reason to buy this stock other than for its value, scandal or not. Four insiders, including the CEO and CFO, bought stock, which was also significant because this was the first activity in a year, and the last was selling.
The institutional activity is also telling. The institutions own about 75% of the stock and have been buying on balance since the IPO. The buying pace has been elevated in 2024 and remains strong in Q4, with purchases outpacing sales by more than 2-to-1. The largest shareholders include fund managers Vanguard and BlackRock, but institutions are broadly represented, providing a solid support base. Recent large buyers include Geode Capital Management and State Street, which purchased the stock after the short report was released and own nearly 2% each.
Zeta Global Holdings Growth Accelerates in 2024
Zeta Global Holdings is an omnichannel, data-centric cloud services provider that delivers enterprise marketing intelligence and automation services. Its AI-powered business is growing at a high double-digit pace in 2024, bordering on hyper-growth and outpacing the consensus estimates on a growing client base and deepening service penetration. The only bad news is that growth will slow into the 20% range next year, but the forecasts are likely low. AI service growth is only in the first inning of a long game, and Zeta Global Holdings is well-positioned to deliver. Easing monetary, regulatory, and tax policy is expected to create economic tailwinds in 2025 that will drive demand throughout the economy.
The analysts remain steadfast in their support for Zeta Global Holdings. The short report caused one downgrade to Hold and one price target decrease offset by a recent price target increase from Canaccord Genuity. Canaccord waited until after the company issued its rebuttal before making its move. It raised its price target to $28, citing a “more comfortable” view of the business.
In their opinion, the company remains on solid footing, and management is doing a good job of bolstering public opinion. Their efforts are not limited to buying stock for personal accounts but include a new company buyback authorization. The new authorization is worth $100 million and increased the existing allotment to $114 million, which is worth 2.4% of the stock. Regarding the balance sheet, the company is well-capitalized with minimal debt and ultra-low leverage. Total liability was less than 1x equity and 1x cash at the end of Q3.
The Technical Outlook: Zeta Global Holdings Falls to Critical Support Level
The price action in Zeta Global Holdings is ugly. The stock fell over 50% to a critical support level near $18. That level aligns with a consolidation earlier in the year and may be strong enough to keep the market from falling further. The price of ZETA stock could rebound sharply in that scenario, potentially advancing to the analyst's consensus target of $38, a gain of 100% from the critical support level. If not, this market could fall to new lows, which is unexpected. The consensus forecast is for Zeta Global Holdings' revenue and profit growth to steadily accelerate through the decade's end.
