COMPANY BACKGROUND

Zeta Global Holdings Corp. (ZETA) offers an AI-powered marketing cloud that leverages proprietary AI and trillions of consumer signals to make it easier to acquire, grow, and retain customers more efficiently.

TRADING THESIS

We are long ZETA into the Q4 print tonight. We like the setup here for a variety of reasons:

• ZETA has a strong track-record of consistently beating the Top Line over the past 2yrs. We think Q4 is another beat.

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• ZETA’s most important vertical, Auto & Insurance, which represented 12% of overall revenues in 2023, was down 30-40% YoY. We already know from Everquote (EVER) that there has been a major inflection in Auto Insurance. This should translate into very upbeat guidance for 2024.
• The Short Interest in ZETA is currently 8M shares. The Shorts have overstayed their welcome and a Short Covering Rally could be at hand.
• We know that Ad Tech Spend was very strong in Q4. ZETA should also benefit from strong Election Spend in the short-term.
• ZETA has already posted Targets for 2025. We believe the company will achieve them sooner than current analysts’ models. Another potential catalyst.

• Valuation is very attractive at current levels. ZETA is trading for 11x ’25 EBITDA numbers. The multiple should re-rate to a Mid-Teens Multiple over the next few quarters. This would get the stock to our intermediate-term extension zone of $15-$16.50.
• Technically, ZETA has been basing out nicely since the company came public. Low-to-Med Teens look very achievable looking at the chart:

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RISKS

In the Spring of 2022, there was a Short Report by the Bear Cave, accusing ZETA of being a roll-up of “low-quality marketing and data-gathering companies.” ZETA was also previously questioned by the SEC over its documentation and accounting, while also calling out problems with the company’s management, including co-founders, David Steinberg, and former Apple Chief Executive, John Sculley. 

We believe this risk has already been digested into the stock and is one reason why it is valued so attractively. Short interest is muted, representing only 4%’ish of the float. So this factor should be muted into the print.

TRADING PLAN

This is a highly-tuned catalytic trade that needs to work right away for us to stay involved.

STOP LOSS:  We will implement a tight Stop at $10.25-$10.50.

Our short-term target is $12-$13.50 on the trading tranche and $15-$16.50 on the long-term tranche.

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Disclosure:   We long ZETA stock and/or in-the-money calls. We may change our positioning at a moment’s notice, without notifying you of any such moves.

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In no shape or manner should the views expressed in this piece be considered investment advice. We reserve the right to change our positioning in our ZETA stock and options positions at a moment’s notice without updating you on any such change in opinion and positioning. That may be tomorrow, even before our price target is hit. Facts change, our opinions can change quickly too.

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