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Bear of the Day: Cardlytics (CDLX)

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Cardlytics (CDLX - Free Report)  is a Zacks Rank #5 (Strong Sell) that is an advertising platform in banks digital channels. Through purchasing data, Cardlytics can see where and when customers buy both online and in a store. From that, they identify opportunities that target people within their bank.  

The stock has seen a serious drop as of late because of a poor earnings report earlier in the month. Additionally, the stock has been damaged technically, so investors looking to buy the dip might want to hold off until the chart looks better.  

More about CDLX

Cardlytics was founded in 2008 and is headquartered in Atlanta, Georgia. The company employs over 600 people and has a market cap of about $3 billion. The stock has Zacks Style Scores of “F” in Value and Growth, as well as “D” in momentum.

Q2 Earnings and Guide

In early August, the company reported an EPS miss of 11%. While the company saw year over year revenues that more than doubled, they guided Q3 revenues below expectations. The CEO had some comments that blamed an uneven recovery in Q3 for the guide and expects macroeconomic challenges.

The stock did not react well, gapping lower and falling from the $120 level to $85. Since earnings, the stock has chopped in the mid $80s and is now back above $90.

Cardlytics, Inc. Price and EPS Surprise

Cardlytics, Inc. Price and EPS Surprise

Cardlytics, Inc. price-eps-surprise | Cardlytics, Inc. Quote

Estimates

The guide lower forced analyst to start dropping their estimates. For the current quarter, numbers dropped over the last 30 days from -$0.25 to -$0.50, or 100%. For the current year, estimates have dropped from a loss of 95 cents to an expected loss of $1.50.  

The Technicals

The stock found post-earnings support at the $80 area. This was where it traded late in 2020 before it broke out earlier this year, essentially doubling in value.

Now the bulls are trying to repair the damage done, recently rallying over the $90 level. However, the 21-day moving average at $91 could see resistance. Above that, $110 is the 50-day and $120 is the 200-day.

Traders should look to sell into these resistance levels as the fundamental story is damaged at the moment.

In Summary

Cardlytics is starting to rally, but the bulls will be limited in what they can do until the next quarter. If the company can beat expectations, then perhaps the stock’s momentum can return. Until then, investors should avoid and look elsewhere.

For those interested in the business service space, Marvell Technology (MRVL) might be a better bet. This company is seeing estimates trend higher for the current year and is a Zacks Rank #2 (Buy).
 


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