Babyfolio
Software Engineer, AI Infrastructure Investor
Zeta Global looks unappealing because, after years in business, it is supposed to be highly profitable but isn't, and the risk-reward is not great. It is not the kind of super-high-growth company in a hot sector worth favoring, though it could still outperform. A post the author replies to argues Zeta benefits from AI and posted a monster quarter yet trades as if it will fail. x.com
Zeta Global is one to avoid despite a strong chance of all-time highs this year. It is a high-beta name popular on social media that has burned many investors in the past. x.com x.com
Zeta Global's growth is increasingly manufactured by acquisitions and lower-margin channels, masking organic deterioration. Excluding political spend and the Marigold acquisition, organic growth slowed to 28%, and the Direct Platform mix slipped to 72%. GAAP EPS of just $0.03 leaves no room for multiple expansion, and rising cost of revenue from agency traffic points to margin compression, explaining the 10% drop despite a beat. x.com
Zeta Global could become a much larger company: at Zeta Live, executives with over $200 billion of decision-making power discussed what its keynote meant for their own companies, a firsthand sign of potential enterprise interest. Its 120% net dollar retention suggests existing customers get value, though future growth is uncertain. x.com
Zeta Global looks expensive at 52 times cash earnings, against the 30 times software companies usually get. Fair value sits at $16.62 to $21.15, based on 30 times next year's cash earnings give or take 12%, and the $32.63 price is 54% above the high end. That range leans on forecasts, with forward earnings 67% above trailing. This is a levels-only read off reported earnings and estimates, with no fundamental work. x.com
Zeta Global sells into an extremely competitive marketing-software space, and AI tools like Claude layered on top make it worse. Vendors like Zeta and Mixpanel used to compete hard just to win product-launch business, user acquisition costs are high, and a graveyard of better enterprise SaaS sits in private markets, unable to exit on slow growth and low margins. Others cite Zeta's 50% growth and 120% net revenue retention, but buying software here is trying to be too clever. x.com x.com x.com … Show more
Zeta Global's falling share price is an opportunity because the business keeps improving. As @Investinc_Intel lists, Zeta landed three of its largest deals in Q2, is growing 50%, has rising net revenue retention, is buying back shares, is seeing Athena adoption and expects profitability in Q2. x.com
Zeta Global's CEO Steinberg doesn't seem trustworthy, on top of dilution and an unconvincing strategy and market position. Before Zeta he founded and ran InPhonic, which restated financials in 2007 over accounting errors, disclosed material control weaknesses, faced FTC action over deceptive rebates and investor lawsuits, and filed for Chapter 11 shortly after he sold millions in stock near the peak and stepped down. x.com
Rocket Lab's $37.74 billion market cap is hard to justify while its free cash flow keeps worsening. Trailing free cash flow went 95.2% further negative, from −$204M to −$398M. By contrast, Zeta, at a $7.64 billion market cap, grew free cash flow 59.2% to $224M and is expected to turn GAAP profitable this year. x.com
Zeta Global is being sold on broad SaaS fears that ignore its fundamentals. Its strongest years have come during midterm election years, it is very close to full-year GAAP profitability, and its return on ad spend is 6. x.com
Zeta Global is definitely too cheap, likely 60-80% undervalued, at about 10x next-twelve-months EBITDA. If it grows EBITDA at a 28-30% annual rate for the next few years, it should trade at 16-18x. AppLovin is a bigger, better company, but Zeta is still worth owning; it is liked, not loved. x.com x.com
