What Happened:
Shares of digital media measurement and analytics provider DoubleVerify (NYSE:DV) jumped 8.4% in 2 days of strong outperformance after the company, which uses technology to fight ad fraud and ensure brand safety, announced the expansion of its brand safety and suitability coverage on Meta. DoubleVerify added measurement capabilities for Facebook and Instagram Feeds and Reels, which means advertisers can verify campaign quality and protect their brand from being next to or associated with questionable content. These announcements are exciting because they signal huge tailwinds to volumes and because they further the argument that DoubleVerify's product is the gold standard.
"DoubleVerify's expansion of brand safety and suitability solutions across Facebook and Instagram is an important step forward in our ongoing efforts to foster digital transparency and trust within our advertising environments," said Samantha Stetson, Vice President of Client Council and Industry Trades at Meta.
DoubleVerify started its partnership with Meta in 2017, progressively expanding its offerings from fraud and viewability solutions to brand safety, suitability, and media quality authentication across various Facebook and Instagram ads. The company has similar arrangements with companies like Alphabet (formerly Google) to fight ad fraud and ensure brand safety on platforms like YouTube.
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What is the market telling us:
DoubleVerify's shares are quite volatile and over the last year have had 10 moves greater than 5%. In context of that, today's move is indicating the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The biggest move we wrote about over the last year was 6 months ago, when the stock dropped 9.2% on the news that the company reported second-quarter revenue that narrowly beat analysts' estimates and roughly came in the middle of the company's previous guidance range. It is usually a negative for a fast-growing and high-valuation company not to beat. To add salt to the wound, next quarter's revenue guidance came in slightly below analysts' expectations, and the full-year revenue guidance also slightly missed Wall Street's expectations.
Also, the company announced an agreement to acquire Scibids, a global leader in AI-powered digital campaign optimization, in a cash and stock transaction valued at $125 million. While some may cheer the seemingly on-trend acquisition, the news of the deal was overshadowed by a weak quarter featuring disappointing guidance.
DoubleVerify is up 8.4% since the beginning of the year, and at $39.19 per share it is trading close to its 52-week high of $42.10 from July 2023. Investors who bought $1,000 worth of DoubleVerify's shares at the IPO in April 2021 would now be looking at an investment worth $1,087.
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