Digital advertising platform Cardlytics Inc. (NASDAQ: CDLX) reported that the firm had missed its earnings expectations by 11% in early August.
Despite a year-over-year sales increase of more than twice as much from $28.2 million in the second quarter of 2020, revenue jumped to $58.9 million, increasing 109% year-over-year. Still, the company’s Q3 revenue guidance was below forecasts.
As a result, the stock’s price plummeted, dropping from $120 to $85. Since earnings, the stock has fallen to the mid-$80s and is presently trading above $90.
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CDLX has underperformed compared to its peers on the stock market. For instance, recent developments have not been encouraging, with both the medium- and short-term outlooks giving negative signs.
Furthermore, CDLX is now trading at the bottom of its 52-week range, which is not a promising indicator. Certainly not because the S&P 500 Index is trading close to new highs. In the past month, CDLX traded in a range of $75.31 – $128.53, and it’s now trading towards the lows of this range.
On closer inspection, there is a crucial support point on a weekly time frame at $79.82 from the horizontal line. An area between $127.31 and $127.61 looks like resistance based on various trend lines across different time periods.
The volume appears to have returned to normal, suggesting that this stock may not see such volatile movements as it had after its post-earning results. However, considering everything, it may not provide a decent setup right now because the price movement has been too volatile to locate a suitable entry and exit point; therefore, it is probably best to wait for a consolidation first.
Wall Street analysts predict
Despite the negative indicator, assessments by 4 Wall Street analysts that have issued 12-month price forecasts for Cardlytics within the past three months interestingly have given CDLX stock a median price objective of $120, with a high estimate of $120 and a low prognosis of $120.
Based on the performance over the last three months, three TipRanks experts have reaffirmed their ‘Buy’ recommendations for Cardlytics, while one analyst has advised ‘Hold.’ It’s worth noting that none of the analysts recommends selling the stock.
Most experts believe CDLX to be a solid investment, with an average price target of $120 and a 31.64% gain from the current price of $91.16.
Synopsis of CDLX
The stock gained support after earnings in the $80 range, and in late 2020, it was trading at this level before it surged in value earlier this year, more than doubling its worth.
Since then, the market has been trying to repair the damage. Lately, CDLX had risen above the $90 mark, trading at $91.16, up 4.59%, when the market closed on Friday. Above that, $110 represents the 50-day moving average. On the other hand, the 21-day moving average around $91 might act as a barrier to the bullish trend.
In summary, Cardlytics is starting to rebound, but the bulls will potentially be restricted in what they can accomplish until the third quarter of the current year. If the firm can surpass expectations, the stock’s momentum can possibly return to its former highs.
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