What Caused the 24% Drop in Perion Network Stock in the First Half of 2022?

 

What’s Been Going on with Perion Network’s Stock This Year?

Perion Network’s (NASDAQ: PERI) shares experienced a bit of a setback in the first half of the year, aligning with broader market trends. Notably, Perion faced a 24% loss during this period, slightly underperforming the S&P 500’s 21% decline. The dip in this ad tech stock garnered attention due to its resilience compared to its counterparts in the digital advertising realm. Larger players like Alphabet and Meta Platforms saw a decline in their stock prices as recession concerns loomed, and the pandemic-induced tailwinds began to wane. In spite of this challenging backdrop, Perion managed to deliver robust results for the year, even increasing its guidance. This helps explain why it has outpaced competitors such as The Trade Desk and Magnite. The chart below provides a visual representation of this journey.

What Stands Out?

The chart illustrates that Perion largely mirrored the performance of the S&P 500 for the year, with minor fluctuations. However, it experienced a dip at the beginning of 2022, followed by a surge in early April following an upward revision of its guidance. It’s important to note that Perion is a relatively obscure small-cap stock based in Israel, which can explain its struggle to diverge from broader market trends. Nevertheless, Perion’s performance in 2022 thus far is commendable. The company exceeded expectations in both of its earnings reports this year, showcasing substantial growth and profitability. In the fourth quarter, its overall revenue surged by 34% to reach $158 million, while adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) skyrocketed by 89% to $28.9 million, equating to an 18% margin. Similarly, in the first quarter, Perion achieved a 40% revenue increase, reaching $125.3 million, and its adjusted EBITDA saw a remarkable 158% surge to $22.7 million. The company also raised its guidance in both reports, projecting a revenue range of $620 million to $640 million for the year, translating to a 32% growth at the midpoint. On the bottom line, it anticipates that adjusted EBITDA will rise by 44% to land between $98 million and $102 million in 2022. The stock did experience a 6% drop in mid-June following a short-seller attack by Edwin Dorsey of The Bear Cave. However, it managed to recover those losses shortly thereafter.

What’s Next?

Perion reiterated its guidance at the end of June, offering investors some reassurance that the company does not anticipate a sudden drop in demand for its services. These services primarily revolve around its intelligent hub, which acts as a connection point between ad buyers and sellers. While the stock could face further declines if market conditions deteriorate, its current price-to-earnings ratio of just 13 suggests a compelling long-term investment opportunity

Get back to Seikum News 🤓