Direct Digital Holdings (DRCT) AI Stock Analysis

• Market Cap: $9.88M
• Dividend Yield: N/A
• Average Volume (3M): 1.96M
• Price to Earnings (P/E): ―
• Beta (1Y): 1.39
• Revenue Growth: -69.54%
• EPS Growth: -19665.56%
• Country: US
• Employees: 79
• Sector: Communication Services
• Sector Strength: 90
• Industry: Advertising Agencies
• EPS (TTM): -0.35
• Shares Outstanding: 8,113,480
• 10 Day Avg. Volume: 390,567
• 30 Day Avg. Volume: 1,959,806
• PEG Ratio: <0.01
• Price to Book (P/B): -0.78
• Price to Sales (P/S): 0.00
• P/FCF Ratio: -1.24
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: $6.00
• Price Target Upside: 1053.85% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 2

• Rating: 40 Underperform
• Price Target: $0.50 ▼(-3.85%Downside)

Direct Digital Holdings is facing substantial financial and operational challenges, with a significant decline in revenue, negative profitability, and high leverage. While there are positive signs in cost-cutting and buy-side revenue growth, the overall financial health is weak. The technical indicators suggest a bearish trend, and the company’s valuation is unattractive due to negative earnings. Despite maintaining optimistic guidance, the recovery from past disruptions remains uncertain, resulting in a low overall score.

Positive Factors

Cost management

Management continues to evaluate costs judiciously, finding a healthy baseline with potential for further reductions.

Guidance

Reiteration of guidance despite macro uncertainty provides incremental confidence in Direct Digital's outlook.

Negative Factors

Macro environment

4Q24 revenue of $9.1 million was a bit worse than anticipated, as macro trends caught up with Direct, creating an incredibly challenging environment.

Scale event visibility

There is a little bit of extra worry as the scale event is expected in the second half, where visibility is unclear.

Direct Digital Holdings Business Overview & Revenue Model

Company Description

Direct Digital Holdings, Inc. operates as an end-to-end full-service programmatic advertising platform. The company's platform primarily focuses on providing advertising technology, data-driven campaign optimization, and other solutions to underserved and less efficient markets on both the buy- and sell-side of the digital advertising ecosystem. It serves various industry verticals, such as travel, healthcare, education, financial services, consumer products, etc. with focus on small- and mid-sized businesses. The company was founded in 2018 and is headquartered in Houston, Texas.

How the Company Makes Money

Direct Digital Holdings generates revenue primarily through its programmatic advertising services, where it acts as an intermediary between advertisers and publishers. The company earns money by taking a percentage of the advertising spend that flows through its platform. Additionally, DRCT offers data-driven marketing solutions, providing clients with insights and analytics to enhance their advertising strategies, which also contributes to its revenue. Significant partnerships with advertisers, agencies, and media companies further bolster its earnings, as these relationships expand its network and increase the volume of transactions processed through its platform.

Direct Digital Holdings Financial Statement Overview

Summary

Direct Digital Holdings faces significant financial challenges, with declining revenues, negative profitability margins, and high leverage. Negative stockholders' equity and inconsistent cash flows highlight the need for financial restructuring.

Income Statement

Direct Digital Holdings has shown a volatile revenue trajectory with a significant decline in revenue from 2023 to 2024. Gross profit margins have decreased, and both EBIT and EBITDA margins are negative, highlighting operational inefficiencies. The company has also experienced consistent net losses over the years, with a particularly large net loss in 2024.

Balance Sheet

The balance sheet reveals high leverage, with a negative stockholders' equity in recent years, indicating potential solvency issues. The debt-to-equity ratio is concerning, as the company has been operating with negative equity. The equity ratio has also turned negative, reflecting high financial risk.

Cash Flow

Cash flow from operations has been inconsistent, with a negative free cash flow in 2024, reflecting cash management challenges. However, the company had a positive operating cash flow in 2023, indicating some ability to generate cash from core operations. Free cash flow to net income ratio is negative, aligning with the net losses.

Breakdown
TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement		Total Revenue
94.22M	62.29M	157.11M	88.04M	38.14M	12.48M
	Gross Profit
18.41M	17.39M	37.57M	28.00M	18.43M	5.17M
	EBIT
-8.49M	-13.23M	-2.19M	6.66M	4.38M	526.30K
	EBITDA
-293.93K	-13.23M	473.00K	9.85M	6.34M	457.44K
	Net Income Common Stockholders
-5.28M	-19.91M	-2.19M	2.92M	-1.51M	-908.19K
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
3.33M	1.45M	5.12M	4.05M	4.68M	1.61M
	Total Assets
52.77M	26.01M	70.67M	56.81M	36.00M	30.70M
	Total Debt
34.71M	4.67M	30.95M	24.56M	20.82M	13.37M
	Net Debt
31.37M	3.23M	25.84M	20.51M	16.13M	11.76M
	Total Liabilities
58.56M	45.74M	74.35M	53.01M	36.37M	28.33M
	Stockholders Equity
-5.79M	-19.73M	543.00K	3.79M	-374.86K	2.37M
Cash Flow		Free Cash Flow
-8.96M	-8.65M	2.38M	1.44M	3.75M	-574.53K
	Operating Cash Flow
-8.95M	-8.65M	2.56M	2.13M	3.75M	-574.53K
	Investing Cash Flow
-58.02K	-17.00K	-178.00K	-687.96K	0.00	-10.99M
	Financing Cash Flow
7.62M	4.99M	-1.31M	-2.08M	-678.72K	12.29M

Direct Digital Holdings Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 0.52
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Negative
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For DRCT, the sentiment is Negative. The current price of 0.52 is below the 20-day moving average (MA) of 0.58, below the 50-day MA of 0.63, and below the 200-day MA of 1.56, indicating a bearish trend. The MACD of -0.05 indicates Negative momentum. The RSI at 42.80 is Neutral, neither overbought nor oversold. The STOCH value of 48.75 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for DRCT.

Direct Digital Holdings Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
Sector *	61 Neutral	$14.28B	5.89	-4.20%	3.70%	2.73%	-35.75%
MCHX	53 Neutral	$70.24M	―	-16.55%	―	-2.67%	21.65%
SWAG	53 Neutral	$21.03M	―	-12.15%	―	17.04%	-2188.42%
DRCT	40 Underperform	$9.88M	―	-320.07%	―	-69.54%	-19665.56%
FLNT	38 Underperform	$37.20M	―	-123.16%	―	-15.07%	33.40%
CNET	38 Underperform	$2.74M	―	-80.78%	―	-49.52%	-86.35%
BAOS		$3.71M	―		―	―	―

Direct Digital Holdings Corporate Events

Direct Digital Holdings Updates Executive Employment Agreements

On May 27, 2025, Direct Digital Holdings amended and restated employment agreements for its CEO, President, and CFO. The agreements maintain current salaries but enhance severance benefits, particularly in the event of a change in control, where executives will receive increased severance payments and extended non-competition covenants.

The most recent analyst rating on (DRCT) stock is a Buy with a $7.50 price target. To see the full list of analyst forecasts on Direct Digital Holdings stock, see the DRCT Stock Forecast page.

Direct Digital Holdings Faces Nasdaq Non-Compliance Notice

On May 12, 2025, Direct Digital Holdings, Inc. received a notice from Nasdaq indicating non-compliance with the minimum bid price requirement, as its Class A common stock was below $1.00 per share for 30 consecutive business days. The company has until November 10, 2025, to regain compliance, potentially through a reverse stock split, or face delisting. Additionally, between May 13 and May 16, 2025, the company sold 1,100,000 shares of Class A Common Stock for $570,924, exceeding five percent of the total shares issued and outstanding, in transactions with New Circle Principal Investments LLC.

The most recent analyst rating on (DRCT) stock is a Buy with a $7.50 price target. To see the full list of analyst forecasts on Direct Digital Holdings stock, see the DRCT Stock Forecast page.

Direct Digital Holdings Sells 2.3 Million Shares

Between April 8, 2025, and May 13, 2025, Direct Digital Holdings sold 2,300,000 shares of its Class A Common Stock for a total of $1,387,015 after discounts. This sale exceeded five percent of the total shares outstanding as of April 8, 2025, and was conducted with New Circle Principal Investments LLC under a Share Purchase Agreement, relying on exemptions from registration requirements under the Securities Act.

The most recent analyst rating on (DRCT) stock is a Buy with a $7.50 price target. To see the full list of analyst forecasts on Direct Digital Holdings stock, see the DRCT Stock Forecast page.