Editor’s Note — This article was updated on March 14, 2022.
Texas-based Digital Turbine (NASDAQ:APPS) can simplistically be described as on-demand mobile media platform provider. Lately, investors have turned against a number of technology-focused assets, and APPS stock has lost much of its value.
However, just because the share price is declining, this doesn’t mean that the company is in trouble. In fact, there’s evidence that Digital Turbine is in expansion mode.
As InvestorPlace contributor a mobile app marketing platform called Appreciate; and Fyber, a company that develops ad monetization solutions for mobile publishers.
Clearly, Digital Turbine is getting bigger — but is it getting better? There’s at least one prominent Wall Street analyst who apparently sees value in Digital Turbine, so there may be a promising investment opportunity here.
A Closer Look at APPS Stock
Over the past year, APPS stock has wobbled all over the place and made it difficult to apply technical analysis. One thing we can say with certainty is that the stock has a 52-week range of $35.55 to $93.98.
That’s a wide range, so expect volatility if you’re planning to invest in Digital Turbine. It’s wise to keep your position size small at all times.
Another indicator of volatility is APPS stock’s five-year monthly beta, which is 2.27. This means that the stock has historically tended to move, in both directions, at least twice as fast as the overall stock market.
Still, if you can tolerate being whipsawed, then an investment in Digital Turbine might be a great contrarian bet. After all, the stock is much closer to its 52-week low than its 52-week high, as it opened at $37.42 on March 9.
The Growth Is Undeniable
According to Digital Turbine, the global mobile advertising market is
estimated to increase in value from $340 billion in 2021 to more than $540 billion in 2025. Of course, the company seeks to capture a sizable swath of this burgeoning market.
Is Digital Turbine succeeding in this endeavor? Admittedly, the selling pressure on APPS stock might be off-putting to some traders. Yet, I invite you to look under the hood and see how the company is doing financially.
As they say, the data doesn’t lie. In the third fiscal quarter of 2021, Digital Turbine generated $375.5 million in revenue, representing an eye-popping 324% year-over-year increase on an as-reported basis.
Not only that, but the company reported non-GAAP adjusted EBITDA (earnings before interest, taxation, depreciation and amortization) of $57 million, up 153% year-over-year.
These triple-digit gains provide an effective rejoinder to any skeptics who thought that digital advertising would be a dead market as our relationship with Covid-19 shifts.
Value-Added Acquisitions
Despite Digital Turbine’s success in addressing the demands of the mobile advertising market, there will still be doubters as APPS stock has yet to stage a meaningful comeback.
Yet, this comeback could be imminent as the company’s acquisitions are evidently providing robust revenue for Digital Turbine. Last year, the company acquired mobile advertising monetization platform Fyber as well as mobile game advertising and monetization specialist AdColony.
By all indications, these two acquisitions are panning out quite well, so far. During the third quarter of fiscal 2022, Fyber contributed $157.4 million in revenue to Digital Turbine, while AdColony contributed $94.3 million.
Moreover, before inter-company eliminations, the total revenue from these two “In-App Media” segments (Fyber and AdColony) increased 40% year-over-year on a pro forma basis. These two acquired businesses, truly, could be the key that unlocks significant future revenue streams for Digital Turbine.
The Bottom Line on APPS Stock
APPS stock is under negative price pressure, but there could be a buying opportunity here. For one thing, contrarian investors are supposed to buy high-conviction stocks at low prices.
Next, Digital Turbine is demonstrating powerful revenue growth. We’re talking about a 300%+ year-over-year increase here.
Plus, Digital Turbine’s acquisitions appear to be adding considerable value to the company. Knowing all of this, investors can start a small position in APPS stock in anticipation of a rebound sooner or later.
On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
