Cardlytics rallies after earnings growth but volatility and risk remain

Cardlytics (NASDAQ: CDLX) was up 6% in premarket trading on Tuesday, May 3 after the company reported an estimate beat in the first-quarter earnings results. The shares were trading strong throughout the day, only to crash by 7.85% in after-hours trading. 

The company reported revenue of $67.9 million, a 27.6% increase year-over-year (YoY) with gross profit rising 34% YoY by $26.2 million. Additionally, earnings per share (EPS) was -$0.38 which beat estimates by $0.17.   

During the presentation call, an interesting note was mentioned which relates to major banks doubling their investments into CLDX which could bode well for the future. 

A lot of good updates 

Cardlytics showed tremendous growth sharing opportunities to cross-sell and increase partnerships with various clients, these updates will likely see the company be cash-flow positive by the end of 2023 or by the second half of 2023. Though these are their own estimations, however, if the company keeps posting high revenue numbers this just might be the case.

Shares of the company have been devastated from August 2021 onwards, with high selling pressure coming in and knocking down shares by over 30%. Year-to-date the shares are down 45% trading below all daily Simple Moving Averages. 

There is a lot of sell volume coming in for the shares keeping them sub $40 and if the shares can break above there could potentially be more upside. It will be difficult for the shares to cover ground to $50 which should be the next resistance line.  

Elsewhere, analysts give the shares a moderate buy rating predicting that in the next 12 months on average the shares should be trading around $57. This would represent a potential upside of 51.60% from the current price of $37.60, if more buying pressure comes in these numbers could be realistic for 2022, especially if more positive earnings surprises come along.

Despite having a challenging few quarters behind them CDLX seems to be heading in the right direction. The earnings call highlighted some major developments, solid earnings, and potential benefits in the future for shareholders. 

Staying or entering positions in companies like Cardlytics will require gauging one’s risk appetite since the shares tend to move up and down in wide margins possibly causing investors to have an emotional reaction to the price action. 

If and when this occurs usually investors close out positions and take a loss, so doing research and understanding risk appetites is the best way to make a play on this company. 

Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk.