Needham says Zeta selloff on short report overdone, remains buyer

Needham says shares of Zeta Global traded off sharply yesterday following the publishing of a short report that alleges the company is boosting its revenue growth via round tripping on two-way contracts with data partners and is collecting consumer data in a predatory manner via a network of consent farms. Zeta published a response to the allegations, denying use of consent farms, clarifying the overstatement of revenue and data contributions of Apptness and ArcaMax, discussing the nature of its internal audit processes, and noting a clean audit from Deloitte on its fiscal 2023 financial statement, the analyst tells investors in a research note. Given these points of clarification in the response, Needham believes the selloff in shares is overdone and remains a buyer on the weakness. It keeps a Buy rating on Zeta with a $43 price target.