- JMP Securities analyst Andrew Boone maintains Shutterstock Inc SSTK with a Market Perform.
- Shutterstock agreed with Meta Platforms, Inc META to acquire GIPHY, a growing library of conversational content (predominantly GIFs), for $53 million of net cash, with the transaction expected to close in June 2023.
- The transaction creates another enterprise product for Shutterstock to sell. It moves it into the advertising market, while the analyst views the purchase as opportunistic as it was enabled by the company's relationship with Meta and driven by regulators.
- While Boone likes the optionality and low purchase price of GIPHY, he remains most focused on Shutterstock's core marketplace business, facing increased competition from generative AI.
- To be clear, Shutterstock is seeing ongoing demand from enterprise accounts, including data sales to training AI models, but with eCommerce revenue (56% of 1Q23 revenue) declining 4% Y/Y ex-FX last quarter, he looks for more excellent stability in demand from SMBs and prosumers before becoming more optimistic on shares.
- With scaled and growing content and no cost to platforms that connect to it, Boone expects GIPHY to continue to add partners and expand its impressions as he views it as a leading platform for GIFs.
- While valuation is at a discount to other marketplace peers, given the potential disruption from generative AI, the analyst believes shares are fair-priced at current levels.
- Needham analyst Bernie McTernan reiterates Shutterstock with a Buy and a $90 price target.
- The analyst views this acquisition as a relatively low-cost call option on a depressed valuation, given META's forced sale from the U.K. CMA following their purchase for $400 million.
- SSTK does not expect GIPHY to generate revenue in FY23. Still, the upside is creating a native advertising platform for advertisers that reaches 1.7 billion DAUs across social media and other venues, with distribution and premium content as monetization levers.
- Price Action: SSTK shares are trading lower by 2.65% at $51.76 on the last check Wednesday.
- Photo Via Company
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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