APP - Digital Turbine: Alternative To Tackle The Apple-Google App Duopoly

2024-02-13 13:04:48 ET

Summary

• From above $90 at its 2021 peak, Digital Turbine's stock has tumbled to less than $4 as its financial results have deteriorated.
• Looking deeper, it is positioning itself as an alternative distributor in the fast-evolving app economy currently dominated by the Apple-Alphabet duopoly.
• There are monetization opportunities, especially with the DMA Act, but things can take longer to materialize when you are pitched against big tech amid a competitive AdTech background.
• As a result, there are risks that the shares go even lower and approach $1 in my view.
• Still, with superior FCF generating ability, undervaluation relative to a peer, and a middleman position between OEMs, carriers, and software developers, this constitutes a long-term buy.

There is no shortage of metrics that justify a Strong Sell position in Digital Turbine ( APPS ) or DT. Recently, the stock is down by around 25% after posting results that came under what analysts had estimated and a soft guidance. Trading at less than $4 with a trailing sales multiple available at a discount of more than 70% relative to the IT sector, this thesis aims to show that it is a buy....

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