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I have been watching $CRTO stock for a while and I have now made it one of my biggest positions in my personal portfolio as I firmly believe that it can be one of the best performing stocks this year
A thread
https://www.criteo.com/
A thread
https://www.criteo.com/
1/ I like $CRTO for 4 main reasons: the company is fundamentally misunderstood, the company is crucial for the future of advertising in the online retail and ecommerce space, it has a massive TAM, and an incredibly cheap valuation especially compared to $MGNI and $TTD
2/ $CRTO is misunderstood because of its legacy business of Retargeting. Retargeting is the process of serving ads from a website that a user just left in the hopes of getting them to go back to the site to buy something https://mailchimp.com/resources/what-is-retargeting/
3/ Retargeting was a lucrative business as $CRTO was growing revenues by 30-40% back in 2016-2017. Retargeting relies heavily on 3rd party cookies that were primarily enabled though internet browsers like Chrome and Safari
4/ However, Apple and Google came out in 2018 and said that they would start to phase out 3rd party cookies by 2022. This hit $CRTO really hard as Retargeting suddenly became a dying business
5/ $CRTO started to see revenue decline for a couple years so the company started to explore new revenue streams. $CRTO brought in a new CEO and C-suite to overhaul the companyâs strategy
6/ $CRTO calls their new revenue streams, New Solutions, with Retail Media being their primary solution. New Solutions is why I am so bullish on this company
7/ New Solutions are high growth, have large TAMs, and rely on $CRTO âs own Shopper Graph
Shopper Graph is the worldâs largest 1st party shopper data set. 1st party data is literal gold in the advertising world as it clearly identifies users but also can predict their intent
Shopper Graph is the worldâs largest 1st party shopper data set. 1st party data is literal gold in the advertising world as it clearly identifies users but also can predict their intent
8/ $CRTO Shopper Graph analyzes $2B in daily ecommerce sales and has data on 2.5B users. $CRTO has been able to amass this proprietary data thanks to its longstanding data sharing relationship with over 20k retail clients https://www.criteo.com/blog/explained-criteo-shopper-graph/?slide=2
9/ Retail Media is essentially a DSP that leverages $CRTO Shopper Graphâs 1st party data to target the right users, making the ad more impactful, benefiting the advertiser and ultimately $CRTO as it takes a % of the ad dollars https://www.criteo.com/products/retail-media-for-brands/
10/ Retail Media is growing same client revenues 69% and is expected to accelerate further. Retail Media makes up ~65% of New Solutions revenue and $CRTO sees New Solutions making up nearly 30% of 2021 total revenue
11/ Based on my calculations and estimates, $CRTO New Solutions and Retail Media will grow 50% and 75% respectively in 2021
12/ I expect this high growth to continue as the TAM is massive
$CRTO sees itself as the Amazon of ecommerce advertising
Total global ecommerce sales are expected to reach $2.8T, with US ecommerce ad spend expected to hit $22B this year
$CRTO sees itself as the Amazon of ecommerce advertising
Total global ecommerce sales are expected to reach $2.8T, with US ecommerce ad spend expected to hit $22B this year
13/ Even with this growth, $CRTO is only trading at ~2x EV/NTM sales. This is compared to $MGNI at 25x and $TTD at 37x. $CRTO looks incredibly cheap
14/ $CRTO gets missed by growth investors because Retargeting still accounts for most of the companyâs revenues (80%) so if you simply look at their top line revenue it doesnât look like the company is growing but if you dig deeper you see that the real growth is impressive
15/ Even if you value $CRTO Retargeting business at 0 (I argue there is still value there as Retargeting has strong FCF), their New Solutions business is incredibly undervalued on its own
16/ Only looking at New Solutions revenue, that would imply that $CRTO trades at 6x. Again, this is compared to $MGNI at 25x and $TTD at 37x
17/ $CRTO is undervalued despite New Solutions growing faster than revenues at both $MGNI and $TTD, having a larger TAM than $MGNI, having more revenue than $MGNI, and having the biggest set of shopper 1st party data
18/ If we apply these multiples to $CRTO New Solutions revenue then the implied prices for $CRTO are $103 and $150. $CRTO is currently at ~$31
19/ $CRTO is a turnaround story that has incredible growth at its underlying New Solutions businesses and I believe the stock is at an inflection point
20/ The market is slowly realizing this as the stock has started to run up but I think it is still in its early innings of growth. I personally think we could see $CRTO follow a similar path as $MGNI stock
21/ Absolutely no one is talking about $CRTO on FinTwit but I see a lot of people talking about $MGNI and $TTD so I wanted to expose you all to this name
Here is a link to their latest investor presentation:
https://criteo.investorroom.com/download/CRTO+101_Jan+2021.pdf
Here is a link to their latest investor presentation:
https://criteo.investorroom.com/download/CRTO+101_Jan+2021.pdf
22/ As a reminder, this is not financial advice. It is solely my own personal opinion. Please do your own due diligence. I am long. Please comment your thoughts!
23/ Please follow and retweet if you like this analysis!
