What Happened?
Shares of digital media measurement and analytics provider DoubleVerify (NYSE: DV) jumped 8.8% in the morning session after Stifel analyst Mark Kelley reiterated the stock's Buy rating with a price target of $22 based on news of a potential price hike (from DoubleVerify). He added "We've learned that DoubleVerify is raising prices by roughly 5% on average (pricing ranges from unchanged to +8-10%, depending on the product), effective February 1st." The price increase is expected to improve concerns regarding pricing pressure in the ad verification market and also boost DV's growth outlook.
After the initial pop the shares cooled down to $19.94, up 3.6% from previous close.
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What The Market Is Telling Us
DoubleVerify’s shares are somewhat volatile and have had 11 moves greater than 5% over the last year. In that context, today’s move indicates 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 8 months ago when the stock dropped 40.5% on the news that the company reported weak first quarter earnings results. Double Verify lowered the midpoint of its full year revenue guidance by 3.9% or $27 million, blaming large retail and CPG (consumer packaged goods) customers and their choppy spending patterns. Adjusted EBITDA guidance was also lowered. This brings up a question of customer concentration and potentially that secular volume tailwinds from social media and CTV (connected TV) are not that powerful at the moment.
Overall, the results could have been better, and after competitor Integral Ad Science (NASDAQ: IAS) warned of pricing competition in the market the previous quarter (which DV denied seeing), this result is certainly bad for sentiment and puts into question what short to medium-term top line projections should look like. Following the results, Keybanc downgraded the stock's rating from Overweight (Buy) to Sector Weight (Hold).
DoubleVerify is up 3.5% since the beginning of the year, but at $19.94 per share, it is still trading 53.1% below its 52-week high of $42.50 from February 2024. Investors who bought $1,000 worth of DoubleVerify’s shares at the IPO in April 2021 would now be looking at an investment worth $553.75.
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