Zeta (ZETA)
I moved Zeta (ZETA) to buy this morning given the rather extreme selloff after earnings. Not long after that alert went out, a short seller by the name of Culper Research issued a short report on Zeta.
As is the norm, the report is long, alleges a lot of dicey shenanigans, and claims the stock is going to crash. Behind the scenes, Culper Research takes a short position, puts the report out there, hopes the stock tanks, then closes its position for a gain.
Rarely, the allegations in these reports uncover a legitimate fraud. Almost all of the time they do damage to a stock in the short term, it results in a bunch of lawyers trying to get shareholders together into a class action lawsuit alleging that management screwed them over, and then the stock goes on to eventually recover.
There are no guarantees that scenario will play out this time. But the odds are in favor that it will.
We have not yet heard from any analysts or Zeta management. But we will. In the meantime, ZETA stock is damaged goods.
My expectation is the stock will bounce back from this. Maybe not to 30 or 35 for a while, but higher than it is now. For those who have the risk tolerance to dive into this falling knife, the profits could be significant. But, it bears repeating that there are no guarantees about how this will go. ZETA stock could be +20% or more by the end of the week. Or it could be lower.
Given the extreme volatility here and a certain level of discomfort suggesting people buy a stock under attack, I am moving ZETA back to hold. Full disclosure, I am personally long ZETA and do not plan to sell into this weakness. Move to hold. HOLD
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Zeta Global (ZETA): Nibble, Bite or Spit Out?
By far the most questions I’m getting right now are about Zeta (ZETA). You read my update yesterday, and it was bullish. Analysts increased price targets from the mid-30s into the low 40s, with some going up to 50.
But the stock looks like garbage. It fell 23% yesterday and is down another 6% today. It’s trading near 26.5 as I write this.
That would sound scary, but of course, ZETA raced 34% higher over the five days heading into earnings so context is key. As of right now, it’s just a little below where it was prior to the pre-earnings rally.
So, do we nibble on a few shares, bite off a bigger chunk, or spit it out and lock in the 110% gain we currently have?
My advice lies somewhere between nibble and bite. Which means I’m moving ZETA to buy today.
My thinking goes like this. The quarter was very good, but 2025 guidance was conservative, which is par for the course here. To be fair, it wasn’t really even guidance. Management was more like, “Yeah, we’re fine with what you analysts are saying as far as what you expect in 2025. But we’ll dial in our guidance and let you know what we’re thinking in February.”
In response, ZETA stock has fallen. This is out of sync with what many other glamour growth stocks have done lately, which stinks. But, we have a rather clear line of support at 25.8, which is very close to where the stock is now. Buying now in anticipation of ZETA finding support there is a logical strategy for the risk-tolerant.
If ZETA cracks support, it may make sense to spit it out. But if it doesn’t, then all is good (for now).
Therefore, I’m moving to buy. Whether you nibble or bite is up to you. BUY
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