Key insights
- An analyst views MNTN, a performance TV advertising company, as undervalued despite recent stock price gains. Key bullish factors include recent profitability, strong revenue growth (14.2%), expanding Adjusted EBITDA margins, and significant customer acquisition (46.4%). The company boasts a strong cash position ($214m) with minimal debt, enabling growth funding. MNTN is tapping into a new customer base of small businesses previously not advertising on TV, and its AI advancements (QuickFrame AI 3.0) are noted. Potential risks include workforce reductions and decreased average spend per customer, though the analyst
Some time ago, I stumbled upon MNTN, a beaten down stock with under $1bn market cap, then trading at $8.5. It is a company helping small businesses advertise themselves on CTV as easy as in Meta. Since then to stock price has risen to $10.74, however, I believe it is still undervalued for the following reasons:
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Since last year's Q3, the company became profitable. In their last quarterly report, revenue grew by 14.2%, while the company achieved a net inome of $8.8m. MNTN expexts to achieve a total 20-24%yoy Adjusted EBITDA expanded from 14.5% to 22.2%. Net Profit Margin grew from negatives to +11.9%, by dropping low-margin assets. The company has transitioned to a more software company. They have increased customers by 46.4%.
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Cash Flow is incredible. The company holds $214m in cash, with almost 0 debt. It can use all of that money to fund the growth, with little risk. A DFC estimate using FCF still gave me a margin of safety of around 15%.
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Roughly 95% of MNTN's customers have never advertised on TV before, so it has managed to capture a whole new customer base. They just release QuickFrame AI 3.0, which unifies storyboarding, generative video editing, and ad iteration. In essence, MNTN allows small companies to advertise themselves in TV, a whole new space for them.
There are some risks however, the company cut its workforce by 76 employees to improve effeciency, which time will tell if it is good. Also, the average spend per customer has decreased. That does not worry me much though, because of the company expanding to smaller businesses.
All in all, I think MNTN presents an asymmetrical bet, as the stock has been beaten so much down, mostly driven by a fear for software and fear for the general sector (TradeDesk decline). Despite that, the customers and earnings increase, the cash flow is there, the margin of safety is there, the growth is there and the company invests in AI. What do you think?