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Direct Digital (DRCT) Stock Soared 73.6% on Upbeat 2021 Revenues. Is It a Buy?

Simon Mugo trader
Updated 30 Mar 2022

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Key points:

  • Direct Digital stock soared by 73.6% after releasing its full-year results.
  • Investors cheered the 206% jump in its revenues compared to 2020.
  • However, the company still reported a loss due to rising operating costs.

The Direct Digital Holdings Inc (NASDAQ: DRCT) stock soared 73.6% after its full-year revenues for 2021 rose 206% to $38.1 million compared to the $12.5 million recorded in 2020.

Also read: The Best Cheap Tech Stocks Under $10.

The advertising and marketing technology company revealed that its full-year operating income increased by $5.2 million, representing 619% growth, to reach $4.4 million compared to the $0.8 million loss recorded in 2020.

Investors cheered the news that showcased Direct Digital’s massive transformation during the past year. However, the company still reported a net loss of $1.5 million compared to the $0.9 million loss recorded in 2020.

The company further revealed that its sell-side advertising platform processed 574 billion impressions. The monthly figure surged to an average of 70 billion views in the last quarter of the year.

Direct Digital’s buy-side platform served over 200 customers in 2021 compared to 150 in 2020.

Investors were impressed by the company’s bold forecasts for Q1 2022, where it expects to generate $11.0 million to $11.5 million in revenues, representing a 98% growth compared to last year.

The company expects to generate $48.0 million to $52.0 million in revenues during the 2022 financial year, representing a 31% year-over-year growth.

Mark Walker, Direct Digital’s Chairman and CEO, said: “2021 was an incredible year for us, as we continued to execute on our vision of building a world-class buy- and sell-side advertising platform for middle-market clients.  In 2021 we doubled our revenue through organic growth and the integration of Orange142, acquired in late 2020, and we expect to see continued benefits from the rapid digitization of small- and mid-sized companies moving into programmatic and digital advertising, the increasing localization of programmatic advertising, and with the growth of multicultural audiences and targeted ad spend. We are excited for our new journey as a publicly listed company and to continue to achieve our ambitious goals in 2022 and beyond.”

Keith Smith, Direct Digital’s President, added: “The strategic refinancing of our debt, coupled with our IPO, has positioned us to effectively execute our operational objectives in the coming year.”

The company said it would keep executing its growth plan with the ultimate goal of enhancing shareholder value. The firm will also keep investing in its core business and infrastructure to support its organic and inorganic growth strategies.

Investors who missed out on today’s rally should wait for a future pullback before jumping in later.

*This is not investment advice. Always do your due diligence before making investment decisions.

Direct Digital stock price.

Direct Digital stock price 30-03-2022
Source: Tradingview

Direct Digital stock price soared 73.6% to trade at $4.48, rising from Tuesday’s closing price of $2.58.

Simon has over six years of professional trading experience across FX, commodities and equities. He has a strong passion for financial markets and is particularly focused on price action trading