MediaAlpha (MAX) AI Stock Analysis

• Market Cap: $540.64M
• Dividend Yield: N/A
• Average Volume (3M): 695.49K
• Price to Earnings (P/E): 26.6
• Beta (1Y): 0.98
• Revenue Growth: 122.78%
• EPS Growth: N/A
• Country: US
• Employees: 144
• Sector: Communication Services
• Sector Strength: 73
• Industry: Internet Content & Information
• EPS (TTM): 0.30
• Shares Outstanding: 55,895,645
• 10 Day Avg. Volume: 587,040
• 30 Day Avg. Volume: 695,485
• PEG Ratio: N/A
• Price to Book (P/B): N/A
• Price to Sales (P/S): 0.75
• Price to Cash Flow (P/CF): 11.20
• P/FCF Ratio: 11.20
• 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: $17.00
• Price Target Upside: 112.23% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 8

MediaAlpha demonstrates strong revenue growth and a return to profitability, but high leverage and weak equity position pose financial risks. Technical indicators suggest a bearish trend, and the stock's valuation appears stretched. While the earnings call highlighted robust growth in certain areas, challenges in the health insurance sector and regulatory issues weigh on the outlook. The recent board appointment is a positive but minor factor.

Positive Factors

Advertising Growth

Auto insurers will ramp up advertising-for-growth spend beyond sell-side expectations, benefiting MAX which derives ~65% of its revenues from the auto insurance direct-to-consumer channel.

Financial Performance

MediaAlpha's Q4 results came in well ahead of guidance, with Transaction Value, Revenue, and adj. EBITDA all ahead of expectations, as the Auto insurance recovery continues its momentum.

Settlement and Resolutions

MAX will be able to settle at an amount that does not require an equity capital raise, which if correct would act as a positive catalyst for the stock.

Negative Factors

Guidance and Expectations

First-quarter guidance was below expectations, with the midpoint of revenue at $235 million being roughly 15% below consensus.

Investigation Impact

Shares sold off shortly after stellar Q3 results in response to the FTC investigation and have understandably not recovered.

Regulatory Challenges

The ongoing FTC investigation poses a risk, and the price target is lowered to reflect this and other downward estimate revisions.

MediaAlpha Business Overview & Revenue Model

Company Description

MediaAlpha, Inc., through its subsidiaries, operates an insurance customer acquisition platform in the United States. It optimizes customer acquisition in various verticals of property and casualty insurance, health insurance, and life insurance. The company was founded in 2014 and is headquartered in Los Angeles, California. MediaAlpha, Inc. is a subsidiary of White Mountains Insurance Group, Ltd.

How the Company Makes Money

MediaAlpha generates revenue by connecting advertisers with publishers through its sophisticated programmatic platform. The company earns money primarily by taking a percentage of the transaction value when advertisers purchase media through its platform. This model allows MediaAlpha to benefit from the volume and value of transactions conducted via its system. Significant partnerships with major insurance companies, travel agencies, and other industries enhance its platform's attractiveness and drive revenue growth. MediaAlpha's transparent approach and data-rich environment enable advertisers to optimize their spending, which in turn encourages higher platform usage and increases transaction fees.

MediaAlpha Financial Statement Overview

Summary

MediaAlpha has shown substantial revenue growth and a return to profitability, reflecting positively on its income statement. However, the company faces challenges with high leverage and a weak equity position, which could pose financial risks. The strong cash flow performance mitigates some of these risks, but sustainability depends on continued revenue growth and effective debt management.

Income Statement

The company exhibited strong revenue growth, with a significant increase from $388 million in 2023 to $865 million in 2024. The gross profit margin improved to 16.60% in 2024, up from 17.18% in 2023. The net profit margin turned positive at 1.92% after a net loss in the previous year. This indicates a positive shift in profitability. However, the EBIT margin, while improved, remains low at 4.94%, suggesting room for operational efficiency improvements.

Balance Sheet

The balance sheet shows a high debt-to-equity ratio due to the low equity position, with total liabilities exceeding total assets. The equity ratio is very low at 0.91%, indicating high leverage and potential financial risk. While there is a positive trend in reducing net debt, the company’s financial stability could be a concern due to the high leverage.

Cash Flow

The company has demonstrated strong cash flow management, with a significant increase in free cash flow to $45.6 million in 2024 from $20.2 million in 2023, representing a 125.74% growth. The operating cash flow to net income ratio is favorable, indicating effective conversion of earnings to cash. However, the reliance on financing activities to manage cash flows could pose a risk if external financing conditions change.

Breakdown
Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement		Total Revenue
864.70M	388.15M	459.07M	645.27M	584.81M
	Gross Profit
143.57M	66.71M	70.06M	101.52M	85.38M
	EBIT
42.73M	-39.92M	39.70M	-1.69M	19.54M
	EBITDA
44.53M	-34.43M	46.60M	2.15M	20.72M
	Net Income Common Stockholders
16.63M	-40.42M	-72.45M	-8.47M	10.56M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
43.27M	17.27M	14.54M	50.56M	23.55M
	Total Assets
262.45M	153.93M	170.08M	289.80M	213.93M
	Total Debt
8.85M	174.30M	183.07M	186.80M	182.67M
	Net Debt
-34.42M	157.03M	168.53M	136.24M	159.11M
	Total Liabilities
308.68M	248.35M	256.17M	351.37M	315.45M
	Stockholders Equity
2.38M	-10.29M	-15.99M	-4.34M	-101.52M
Cash Flow		Free Cash Flow
45.62M	20.16M	28.18M	27.97M	51.11M
	Operating Cash Flow
45.87M	20.23M	28.27M	28.62M	51.41M
	Investing Cash Flow
-654.00K	-73.00K	-49.77M	-650.00K	-10.30M
	Financing Cash Flow
-19.22M	-17.43M	-14.52M	-961.00K	-27.59M

MediaAlpha Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 8.01
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Negative
• RSI: Neutral
• STOCH: Positive

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For MAX, the sentiment is Negative. The current price of 8.01 is below the 20-day moving average (MA) of 9.29, below the 50-day MA of 10.36, and below the 200-day MA of 13.67, indicating a bearish trend. The MACD of -0.24 indicates Negative momentum. The RSI at 38.84 is Neutral, neither overbought nor oversold. The STOCH value of 8.27 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for MAX.

MediaAlpha Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
EVER	78 Outperform	$773.78M	24.88	29.75%	―	73.72%	―
IIIV	75 Outperform	$794.28M	5.02	1.23%	―	-27.40%	21780.54%
IAC	63 Neutral	$2.84B	―	-9.29%	―	-12.78%	-343.35%
TREE	60 Neutral	$615.57M	―	-35.80%	―	33.86%	66.85%
MAX	59 Neutral	$540.64M	26.57	-115.07%	―	122.78%	―
Sector *	58 Neutral	$25.21B	3.07	-13.86%	4.29%	2.47%	-43.03%
QNST	57 Neutral	$878.09M	―	-5.52%	―	68.99%	84.85%

MediaAlpha Corporate Events

MediaAlpha Appoints Bradley Hunt to Board of Directors

On March 31, 2025, MediaAlpha announced the appointment of Bradley Hunt to its Board of Directors, succeeding Jennifer Moyer, who decided not to stand for re-election. Hunt, a seasoned executive with extensive experience in the health insurance sector, is expected to enhance MediaAlpha’s market position and shareholder value. His appointment follows the company’s transition from being a controlled company in May 2024. Moyer’s departure marks the end of her significant contributions since MediaAlpha’s IPO, for which the board expressed gratitude.

MediaAlpha Updates Executive Compensation Plans for 2025

On February 4, 2025, MediaAlpha’s Compensation Committee approved changes to the employment agreements of executives Steven Yi and Eugene Nonko. Steven Yi will now participate in the annual cash incentive plan starting with fiscal 2025 bonuses, replacing his previous performance-vesting restricted stock units. Eugene Nonko, who will retire as Chief Technology Officer on June 30, 2025, will not receive performance-vesting restricted stock units for 2025.