By Zeta Global stock price continued its freefall this month, falling to a low of $16, its lowest level since August last year. It has fallen by over 36% from its highest point this year, a drop that has shed millions of dollars in value.
Why Zeta Global stock is falling
Zeta Global, a top software company in the marketing space, plunged as investors remained concerned about disruption by AI tools. This retreat has mirrored that of other software companies like Salesforce, Atlassian, ServiceNow, and Microsoft.
Investor are worried that Zeta Global’s customers will use tools created by companies like Anthropic and OpenAI to build tools to replace the software that they use regularly.
To a large extent, these fears seem unfounded as NVIDIA’s Jensen Huang said recently. He argued that companies will continue using software, while still integrating AI help in their operations. A good example of this is the recent partnership between Zeta Global and OpenAI.
The most recent results showed that Zeta Global’s business was doing well. Its revenue rose by 26% in the third quarter. Its EBITDA grew to 46%, a 320 basis points expansion. Also, the company reported an EBITDA and cash flow of $78 million and $58 million, respectively.
Zeta Global’s management predicted that its annual revenue will be $1.27 billion in 2025, followed by $1.54 billion this year. It sees it hitting $2.1 billion in 2028, a figure that it will likely surpass as the management has always been highly cautious.
The adjusted EBITDA is also expected to keep rising, moving from $274 million in 2025 to over $525 million. Also, it sees its free cash flow continuing the bullish momentum in this period.
At the same time, there are signs that Zeta is not all that expensive, especially when one uses the Rule-of-40 valuation methodology. This approach looks at a company’s revenue growth and its margin. A figure of 40 and above is desirable as it signals that a company is balancing between its revenue and profitability margin.
In Zeta’s case, the revenue growth estimate for 2025 is 27%, while its EBITDA margin is 21%, giving it a rule-of-40 figure of 48%.
Zeta Global stock price technical analysis
The daily chart shows that the Zeta Global share price has plunged in the past few weeks. It plunged from a high of $24 in January to the current $16. As it dropped, it moved slightly below the key support level at $15.8, its lowest level in November last year.
The stock has remained below the 50-day and 100-day Exponential Moving Averages (EMA), while the Relative Strength Index (RSI) moved to the oversold level of 30.
Therefore, the most likely scenario is where the stock continues falling as sentiment in the software industry wanes. This could push it to $10, it lowest level last year.
It will then bounce back as investors buy the dip and as its revenue and profitability growth accelerates. If this happens, it may end the year at $24.75, or even higher.
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