Digital Turbine: Buy, Hold, Or Sell?

The ad-tech and original equipment manufacturer (OEM) Digital Turbine, Inc. (APPS - Get Rating) has demonstrated its business resiliency amid the COVID-19 pandemic, as evidenced by  its  747.6% gains over the past year. APPS has managed to remain profitable and generate positive cash flows at a time when advertisement spending declined by over 13% (as per GroupM 2020 projections).

With 2021 generally expected to be the year of recovery, APPS should grow significantly as  demand for advertisement increases, driven by the digital media boom. However, we are concerned that the stock’s sky-high valuation might lead to a price dip soon. Hence, we think it is advisable to wait for some time before betting on the stock.

APPS – Digital Turbine (APPS) has witnessed a marvelous transition from a penny stock to a billion-dollar company over the span of three years, registering four-digit gains along the way. And the rising demand for digital media advertisement is expected to drive the company further this year. However, given the stock’s sky-high valuation, we think it is questionable whether the stock is a good buy right now.

Here is what we think  could shape the performance of APPS in 2021:

Increasing Market Reach

With major tech companies rolling out devices that are compatible with the coming 5G technology, the demand for new and improved software applications has risen. As such, many companies have been teaming with APPS to pre-install their software on  recently launched mobiles and other devices.

As one of the largest on-device media platforms, APPS maintains long-standing partnerships with more than  40 tech companies, the most popular among which are Apple, Samsung, Verizon, and AT&T. APPS maintains a global supply chain. with operations in some 190 countries worldwide .

APPS won the Company Culture and Technology and Innovation Award from  the Austin Chamber of Commerce in December last year, highlighting its fast-paced growth in the ad-tech space.

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