Web recommendation platform Outbrain Inc. (OB) recently revealed that it has entered into a definitive agreement to acquire a contextual video technology platform, video intelligence AG, for $55 million.
The deal is expected to close in the first quarter of 2022. Outbrain will fund the deal through $46.75 million of balance sheet cash and 412,500 Outbrain shares.
Following the news, shares of the company declined 5.5% to close at $14.57 on Monday.
Implications of the Deal
With this buyout, Outbrain will gain access to video intelligence AG’s expertise in the contextual and machine learning technology space, which allows media owners to enhance user engagement and monetization by adding relevant video content to articles.
Moreover, it provides advertisers with an attractive video ad inventory that drives awareness and user engagement.
Management Commentary
The Co-CEO of Outbrain, David Kostman, said, “vi fits perfectly into Outbrain’s core strategy of providing media owners with technology to enhance user engagement and monetization through relevant content and ads.”
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Price Target
Recently, Needham analyst Laura Martin reiterated a Buy rating on the stock with a price target of $25, which implies upside potential of 71.6% from current levels.
Consensus among analysts is a Strong Buy based on 3 unanimous Buys. The average Outbrain price target of $27.33 implies upside potential of 87.6% from current levels. Shares have declined 27.2% over the past year.
Website Traffic
TipRanks’ Website Traffic Tool, which uses data from SEMrush Holdings (SEMR), the world’s biggest website usage monitoring service, offers insight into Outbrain’s performance this quarter.
According to the tool, the Outbrain website recorded a 9.80% monthly fall, year-over-year, in global visits in October. Further, year-to-date website traffic, compared to year-to-date website growth in the previous year, has declined 5.73%.
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