Digital Turbine Inc: 2,300% Return Already; 5G to Take It Even Higher?

5G to Create New Opportunities for This Soaring Ticker?

When I told Profit Confidential readers to consider Digital Turbine Inc (NASDAQ:APPS) back in April 2019, my goal was to illustrate a stock with the potential of becoming a multibagger.

A multibagger is a stock that delivers a return of more than 100%.

In that article, I wrote, “…if the company manages to grow its bottom line—which it likely will—a gain of 100% could be within reach.”

When the article was published, Digital Turbine stock was trading around $3.50 per share. As of this writing, it’s at $86.69, marking a return of more than 2,300%. No misprint.

Digital Turbine Inc (NASDAQ:APPS) Stock Chart

Chart courtesy of StockCharts.com

Of course, that means Digital Turbine stock is waaaaaay more expensive than before. And frankly, I’m not a fan of chasing the soaring tickers. I like to discover high-potential plays early on, before the rally even begins.

However, there’s something that makes AAPS stock still attention-worthy today: 5G.

Digital Turbine Inc’s platform connects mobile operators, original equipment manufacturers (OEMs), and publishers with app developers and advertisers.

While the company isn’t a particularly well-known name to consumers, its platform is used by more than 40 mobile operators and OEMs, and it has delivered more than three billion app preloads for tens of thousands of advertising campaigns. In total, Digital Turbine’s application media software has been installed on more than 500 million devices. (Source: “Investor Presentation: November 2020,” Digital Turbine Inc, last accessed April 12, 2021.)

And it’s quite obvious how 5G can become a catalyst for Digital Turbine’s business.

5G networks offer up to 100-times faster (theoretically) data transmission speeds and substantially reduces latency compared to 4G networks. Industry estimates suggest that the number of 5G handsets being shipped this year will double that of last year.

With this massive adoption, it’s safe to say that there will be more apps on more 5G devices. And that translates to more opportunities for Digital Turbine, whose platform connects apps and advertisers.

Mind you, the company’s business has already been growing at a very impressive pace.

According to its latest earnings report, Digital Turbine generated $88.6 million of revenue in the third quarter of its fiscal year 2021, which ended December 31, 2020. The amount represented a whopping 146% increase year-over-year. (Source: “Digital Turbine Reports Fiscal 2021 Third Quarter Results,” Digital Turbine Inc, February 3, 2021.)

In particular, the company’s application media revenue rose 58% year-over-year to $56.9 million. Its content media revenue, which mainly included contributions related to its February 2020 acquisition of Mobile Posse Inc, came in at $31.7 million for the quarter.

The bottom line, though, was even more impressive. In the December quarter, Digital Turbine Inc earned adjusted net income of $20.0 million ($0.21 per share), marking a huge improvement from the $5.0 million ($0.05 per share) it generated in the year-ago period.

Furthermore, the company has been going on an acquisition streak.

In February, it announced that it had entered a definitive purchase agreement to acquire AdColony Holding AS, a leading mobile advertising platform serving advertisers and publishers with a reach of more than 1.5 billion monthly global users. (Source: “Digital Turbine Announces Definitive Purchase Agreement to Acquire AdColony,” Digital Turbine Inc, February 26, 2021.)

On March 2, Digital Turbine announced that it had completed the acquisition of Triapodi Ltd, a programmatic demand-side platform company headquartered in Israel. (Source: “Digital Turbine Announces Acquisition of Triapodi Ltd. (d/b/a Appreciate), a Programmatic Demand Side Platform (“DSP”) Company,” Digital Turbine Inc, March 2, 2021.)

Then, on March 22, the company announced that it would be acquiring a 95% stake in Fyber N.V., a Berlin, Germany-based leading mobile advertising monetization platform. Fyber has an extensive network of more than 180 programmatic demand partners that reach a total of 650 million unique monthly active users in 180 countries. (Source: “Digital Turbine Announces Definitive Purchase Agreement to Acquire Fyber N.V.” Digital Turbine Inc, March 22, 2021.)

Once Digital Turbine integrates these new platforms, the synergies should take the company’s revenue to the next level.

Analyst Take

When I first started covering Digital Turbine stock in 2019, my projection was that a 100% return would be on the horizon. As it turns out, APPS stock dramatically over-delivered on my expectation, and early investors are laughing all the way to the bank.

Digital Turbine Inc’s financials have already improved a lot over the years. But with 5G adoption and new acquisitions, the growth theme remains strong.