The Tightrope
Daring a Cardlytics Post Before Earnings
Dear readers,
tomorrow, Cardlytics CDLX 0.00%↑ will announce quarterly results. Around the last announcement of quarterly results the company announced surprisingly that CEO Karim Temsamani leaves on short notice and that Bridg COO Amit Gupta would take the helm. After earnings, the stock was cut in half due to the mixed/weak results (within which I do find some positive aspects, though) and the leadership change.
For background reading on the business I refer you to
. Also highly recommended (but a bit pricey) is extensive weekly coverage and also see recent article.Considering the recent history of the stock and the price level, I thought it would be “interesting” to publish my view about a potential upside vision and the risk of downside before tomorrows earnings. That way I challenge myself to prevent hindsight bias and hold myself accountable.
Outline
TL;DR
Statistical Indicators About the Equity
Why Q2 Wasn’t That Bad
CEO Change
Board Member Addition
The Bridg Option
The Cardlytics Offerings Segment
Valuation Scenarios
Asymmetry
Variant Perception
Conclusion
TL;DR
The company has a well known investor as largest shareholder - with a representative on the Board of Directors
I treat the Retail Media Network activity as a free option
With I believe reasonable assumptions it is a sizable free option to the upside
In a draconian liquidation scenario the investment is a 0; although I consider that very unlikely
The valuation scenarios I develop for the “traditional” segment show an undemanding path to 10x from current prices when considering annual customer basket sizes. 100X is possible but challenging.
Ready? Let’s dive in…