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Loop Media is a Buy, says Roth Capital

Q4

US marketing tech stock Loop Media (Loop Media Stock Quote, Charts, News, Analysts, Financials NYSE:LPTV) brought its quarterly results in for a beat, with Roth Capital Partners analyst Darren Aftahi going over the numbers in a Wednesday update to clients. Aftahi maintained a “Buy” rating on the stock and $6.50 target, saying Loop should hit the ground running in 2023 in terms of retail media and customer engagements.

Based in Glendale, California, Loop is a multichannel streaming platform aimed at connecting digital advertising and content publishers at business establishments in order to better engage and monetize audiences, with business segments in AVOD, the Loop Partner Network, Consumer CTV and SVOD. 

The company posted on Tuesday its fiscal fourth quarter 2022 and full-year financials for the period ended September, 30, 2022, showing revenue of $12.2 million compared to $2.4 million a year earlier. The Q4 net loss was $14.6 million compared to a loss of $13.1 million a year ago. For the year, revenue was $30.8 million compared to $5.1 million for fiscal 2021. (All figures in US dollars.)

Calling it a transformative year for the company, one capped off by its public offering and uplisting to the NYSE American, Loop CEO Jon Niermann said his company is seeing increased penetration into the market and a ramp in Loop’s Partner Platform business, which launched in May.

“There are more than 32 million small and medium sized businesses that can leverage our Loop players compared to the 18,000 currently in circulation, which we believe positions us for continued revenue growth, margin expansion, and turning adjusted EBITDA positive in fiscal 2023,” Niermann said in a press release.

Looking at the numbers, Loop’s Q4 sales of $12.2 million were slightly above Aftahi’s forecast at $12.0 million, while adjusted EBITDA of negative $2.7 million was ahead of his call at negative $4.2 million. The analyst said Loop’s active players grew by 45 per cent sequentially to about 18,240 and ended up ahead of his estimate, while gross margins at 38.5 per cent were also a beat. He noted that Loop ended the quarter with about $14.1 million in cash and about $7.1 million in debt.

“Our model is little changed outside of marginally higher costs as we continue to take a conservative approach to advertising trends,” Aftahi wrote. “We believe LPTV is seeing traction in performance marketing and while the Partner Network remains a new piece of the puzzle, it is leading to increased opportunities in the retail media space, a positive data point for scaling effects.”

Looking ahead, Aftahi is forecasting Loop Media to deliver fiscal 2023 revenue of $67.6 million and an EBITDA loss of $11.4 million, and 2024 revenue of $102.7 million and positive EBITDA of $0.6 million. At press time, Aftahi’s $6.50 target price represented a projected one-year return of 18 per cent.

Q4

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