Collective Audience, Inc. (NASDAQ: CAUD) is a media industry game-changer in many respects. And investors are taking notice, sending CAUD shares higher by over 47% since the start of February. However, while the run is indeed impressive, it's likely the precursor to even higher gains, especially as CAUD continues to actively stake its claim in an audience-based performance advertising and ad-tech sector that's expected to reach $2.9 trillion over the next seven years.
The magnitude of how significant a trillion-dollar market potential is can't be under-appreciated, particularly at a time when the once thought of as impossible mission to become a billionaire has been scored by an ever-growing number of people. Many professional investors thought that a company reaching the trillion-dollar market cap was a far stretch of optimism. But that's been breached too, with Alphabet (NASDAQ: GOOG), Amazon (NASDAQ: AMZN), and NVIDIA (NASDAQ: NVDA) all holding valuations closer to two trillion than one.
The interesting part of what's happening in the investment world is that these valuations are being scored while everyone's watching. The issue, however, is that many people and investors only see what they want to see and ignore, not always intentionally, the most monumental changes in global business and lifestyle landscapes.
Collective Audience Targets Massive Ad-Tech Market
A shift deserving immediate attention is how artificial intelligence, including the peripheries around it, is disrupting the way companies do business. That disruption is more than excellent news for clients needing best-in-class services; it also is for investors looking to exploit opportunities exposed by innovative companies, like Collective Audience, which are capitalizing on potentially massive revenue-generating opportunities by being in the right sector with the right products at the right time. For a company like CAUD, valued at roughly $16.06 million on Wednesday, earning just a tiny slice of the market potential can be transformative. (* share price and market cap on 02/14/2024, Yahoo! Finance, 11:38 AM EST)
But know this: CAUD wants to collect more than just market leftovers. And they intend to succeed in its mission by leveraging a products and services portfolio arsenal that can support earning an impressive share of the opportunities targeted. To ensure staying on track, CAUD has assembled a leadership team that includes a Who's Who list of best-in-industry overachievers that can turn sales ambitions into tangible revenues. The company's recently announced addition of Peter Bordes as CEO complements that list.
Wall Street knows him for all the right reasons. For investors who don't and are evaluating the CAUD value proposition, pay attention because he may help to quickly close the disconnect between his company's assets, potential, and share price. There's plenty to appreciate in the bio above. But the biggest reason for investors to embrace his leadership is that he has a proven track record of making small companies bigger. In most cases, substantially so. And now leading CAUD, and alongside some of the world's brightest business minds, history in that respect may repeat.
In fact, that's likely, considering CAUD has captured one of the digital sector GOAT's, and by doing so, has positioned themselves to become one of the most dynamic and influential companies in its target markets.
An Innovative Products And Services Arsenal
That presumption supports the case that even after its impressive February run, considerable earned value may still be neglected in its current market cap. Missing from its current valuation goes well beyond overlooking its leadership team. In may also neglect to fairly appraise the value inherent to CAUD assets, which already position the company to target its increasing market opportunities. More value should be applied after CAUD announced completing the business combination with DLQ, Inc., a former subsidiary of Logiq, Inc (OTCQX: LGIQ), and Abri SPAC I, Inc., a special purpose acquisition company that previously traded on NASDAQ that held an over $64 million market cap. Nearly 4X higher than CAUD's current.
However, as noted, the valuation gap could close quickly, a likely proposition after CAUD debuted on the NASDAQ market in November 2023. That uplist could attract significant analyst attention. A bullish view could send CAUD stock prices soaring, considering that only about 13.73 million shares are O/S, with roughly 83% of those tightly held by insiders and another 5.2% owned by institutional investors. That leaves a relatively small number of shares in the public float, a consideration that can help fuel and sustain a rally.
The bullish speculation is more than warranted, especially by factoring companies needs for an ally like CAUD to help them make better use of their ad budgets and publishers needing to leverage expertise to more effectively and quickly monetize their content. Keep in mind that while the ad-tech sector is expected to reach trillion-dollar levels in less than eight years, it's already substantial, estimated at $748 billion in revenue-generating potential just three years ago. From there, and with an expected CAGR of 14.7% into the next decade, the case for CAUD bulls gets appreciably stronger, supported by a combined products and services platform specifically designed to identify, convert, and monetize the collective audience of leading brands and publishers.
Right Space, Right Strategy, Right Assets
Those intrinsic abilities put CAUD in an enviable spot to grow bigger and faster than even the staunchest CAUD bulls might expect. That case is not purely speculative, either. It's supported by CAUD's abilities to target lucrative opportunities alongside some of the world's largest companies, including Meta (NASDAQ: META) and those mentioned, which rely almost exclusively on ad revenues for top and bottom-line growth. That's not all. While the large caps may have the means to fend off potential problems in the competitive landscape, thousands of other companies, especially smaller ones, don't have the financial or technical resources to keep pace with changes. Their challenge can be significant value drivers for CAUD. The better news in that respect is that CAUD can provide services that others can't to fill soaring demand.
Industry competitors like The Trade Desk (NASDAQ: TTD), PubMatic (NASDAQ: PUBM), and Magnite (NASDAQ: MGNI), as good as they are in their respective target markets, certainly can't handle the entirety of the market demand. Even factoring in the niche-focused companies like Digital Turbine (NASDAQ: APPS) and DoubleVerify (NYSE: DV), while it helps, still leaves considerable revenues for the taking. CAUD intends to earn its rightful share.
That's no coincidence. As a U.S.-based provider of e-commerce and digital customer acquisition solutions that simplify digital advertising, its proof of concept and performance attracts the right eyes by being an innovative, data-driven, end-to-end provider with solutions facilitating access to data for activating campaigns across multiple channels. Its digital marketing business includes a holistic, self-serve adtech platform, a proprietary data-driven, and an AI-powered system that enables brands and agencies to advertise across thousands of the world's leading digital media and connected TV platforms. All of that's important.
Remember, digital marketing is widely considered the optimal solution for companies to communicate with prospective and existing customers to create business and brand awareness. Moreover, its value extends because digital marketing provides an easy way for companies to get creative and stand out from competitors in congested markets. That's led to significant adtech spending, with many companies targeting the customers' time spent on social media platforms like TikTok and Instagram. Of course, those apps target millions of users. However, as large as they are, other apps, retail media, and gaming environments add billions of additional viewers' eyes. And CAUD wants to connect them to the right interest through retail media, connected television, and E-commerce channels that generate specific metrics and attribution models.
A CAUD Valuation Disconnect Exposed
With the tools and abilities in place to bring audience objectives to life quickly, efficiently, and effectively, CAUD is not a sector player to ignore. The 47% February increase indicates many investors aren't. But clients are taking notice, too. And that's the real value driver behind the investment proposition since it can lead to a further steepening of CAUD's revenue curve.
Thus, using virtually any valuation model, especially based on a sum of its parts calculus, CAUD presents a compelling value investment proposition. While investors are apparently taking advantage of its $1.15 share price on Wednesday, these levels still present what many refer to as ground floor levels. But with momentum at its back, bargain prices may not last much longer, a premise supported by a new era of internet and consumer landscapes that make adtech and the facilitators behind the space, like Collective Audience, an invaluable and necessary competitive tool.
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