What Happened?
Shares of advertising and marketing company Zeta Global (NYSE:ZETA) jumped 13.9% in the afternoon session after the company announced that co-founder, chairman and CEO David A. Steinberg and other senior leaders (including members of the board of directors) intend to buy approximately $3 million worth of Zeta's stock. Such purchases often signal confidence in a business. Management also provided updates related to some negative reports following its third-quarter earnings.
On November 13, 2024, Culper Research, a short-seller, published a report on its website highlighting concerns, that they believe "undermine the integrity of the company's (Zeta's) data collection and reported financials."
Following Zeta's initial rebuttal, Steinberg reiterated, "Last week's 'report' was filled with false claims and objectively wrong information about Zeta Global...Members of the Board, company leadership, and I are showing our confidence in our company's integrity by making these purchases."
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What The Market Is Telling Us
Zeta’s shares are extremely volatile and have had 30 moves greater than 5% over the last year. But moves this big are rare even for Zeta and indicate this news significantly impacted the market’s perception of the business.
The previous big move we wrote about was 6 days ago when the stock dropped 21.6% on the news that the company reported third-quarter earnings, which fell below analysts' expectations. We note that while revenue grew 42% year on year, exceeding analyst estimates, this was mostly due to "Political Candidate" revenue, which will likely not recur for long. The company noted that excluding "Political Candidate" revenue, sales grew by 31%, a deceleration compared to the 33% growth reported in the previous quarter. Guidance for the next quarter followed a similar narrative, implying 25% year-on-year sales growth "excluding LiveIntent (a recent acquisition) and political Candidate revenue."
Overall, the results raise concerns about the consistency of growth going forward, as political revenues are cyclical and may not continue at the same level in non-election years. The stock's reaction suggests markets are looking past the short-term boost to growth while focusing on the bigger picture.
Zeta is up 137% since the beginning of the year, but at $19.84 per share, it is still trading 46% below its 52-week high of $36.74 from November 2024. Investors who bought $1,000 worth of Zeta’s shares at the IPO in June 2021 would now be looking at an investment worth $2,235.
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