IB Net Payout Yields Model

Is Millennial Media Really That Bad?

The independent mobile advertising sector just can't shoot straight or at least thats the opinion of the stock market. Largest independent mobile ad network provider Millennial Media (MM) broke down to new all time lows today. The stock now fetches a market cap of below $600M while supporting huge growth.

The company did disappoint in Q412 (see Millennial Media: When 68% Growth Isn't Enough), but one has to wonder if the punishment fits the crime. The CEO doesn't do the greatest job of explaining the situation on the Mad Money show back after the earnings report, but investors selling this stock off to new lows should take time to review it.

Clearly the company needs to do a better job of containing expectations so that 68% growth isn't seen as a negative. The stock now trades at less than 1.5x forward revenue estimates. All other stocks with these growth rates trade in the 10x multiples.

The CEO was clear that Google (GOOG) isn't stealing share with CPMs and margins increasing. Investors need to load up on this stock after it bottoms out. See the recent action at Glu Mobile (GLUU) to see what happens when investors become too bearish.

Disclosure: Long MM. Please review the disclaimer page for more details. 


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