What Happened?

Shares of digital media measurement and analytics provider DoubleVerify (NYSE:DV) jumped 10.4% in the afternoon session after the stock rebounded from its large post-earnings drop as Bank of America upgraded its rating from Sell to Hold, citing limited downsides, given the combination of "conservative guidance, forthcoming product cycles, and a duopoly position in the ad verification market." The large post-earnings drop is likely spurring some investors to look at the name and re-assess at the lower price and valuation multiple. However, we note that the stock is still down from where it traded before it reported.

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What The Market Is Telling Us

DoubleVerify’s shares are not very volatile and have only had 9 moves greater than 5% over the last year. Moves this big are rare for DoubleVerify and indicate this news significantly impacted the market’s perception of the business. 

The biggest move we wrote about over the last year was 10 months ago when the stock dropped 40.5% on the news that the company reported first quarter earnings results. DoubleVerify lowered the midpoint of its full year revenue guidance by 3.9% or $27 million, blaming large retail and CPG (consumer packaged goods) customers and their choppy spending patterns. Adjusted EBITDA guidance was also lowered. This brings up a question of customer concentration and potentially that secular volume tailwinds from social media and CTV (connected TV) are not that powerful at the moment. 

Overall, the results could have been better, and after competitor Integral Ad Science (NASDAQ:IAS) warned of pricing competition in the market last quarter (which DV denied seeing), this result is certainly bad for sentiment and puts into question what short to medium-term topline projections should look like. Following the results, Keybanc downgraded the stock's rating from Overweight (Buy) to Sector Weight (Hold).

DoubleVerify is down 22.1% since the beginning of the year, and at $15 per share, it is trading 57.3% below its 52-week high of $35.16 from March 2024. Investors who bought $1,000 worth of DoubleVerify’s shares at the IPO in April 2021 would now be looking at an investment worth $416.67.

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