Revisiting Zeta Global: Is the Stock a Buy After a 35% Drop?

$Zeta Global Holdings Corp.(ZETA)$

Zeta is trading around $14.35, down more than 35% from my original recommendation. It’s been a tough ride for shareholders. In this article, I’ll revisit the company, reassess the risks, update my discounted cash flow valuation, and determine whether Zeta remains a buy—or if investors should consider moving on.

Earning Overview

Zeta Global Holdings (NYSE: ZETA) reported earnings of $0.07 per share for the most recent quarter, falling short of the Consensus Estimate of $0.12. This marks a significant miss of 41.67%, despite being an improvement from the $0.01 per share reported in the same quarter a year ago. All figures are adjusted for non-recurring items.

This is not the first earnings miss for the cloud-based marketing tech company. In the previous quarter, Zeta was expected to post EPS of $0.23 but delivered $0.20, a miss of 13.04%. Over the last four quarters, the company has beaten EPS estimates just once—raising questions about the consistency of execution and investor expectations.

Market Reaction & Outlook

Since the start of the year, Zeta shares have declined by approximately 27.4%, underperforming the broader market. For comparison, the S&P 500 has fallen about 5.3% year-to-date.

The stock’s near-term trajectory will largely hinge on management’s commentary during the earnings call and their ability to instill confidence in the company’s path forward. Investors will be watching closely for updates on revenue growth, profitability trends, customer acquisition costs, and how Zeta plans to navigate a challenging macro and regulatory landscape.

Guidance

Looking ahead, analysts currently expect Zeta to report:

• $0.14 EPS on $291.87 million in revenue for the next quarter.

• $0.75 EPS on $1.23 billion in revenue for the full fiscal year.

These projections will likely be updated in the coming days based on management’s latest guidance and how analysts interpret the company’s performance and future strategy.

Regulatory & Legal Headwinds

Zeta’s business model is built around data-driven marketing, which makes it highly sensitive to changes in privacy regulations and government oversight. Recently, the company’s practices have been likened to those flagged in a major FTC report, raising concerns about potential regulatory action.

Privacy laws—like GDPR and CCPA—are evolving rapidly. Compliance requires constant investment in legal, technical, and operational updates. If Zeta falls behind, its core marketing operations could be significantly impacted. Additionally, new restrictions on digital advertising could force Zeta to alter its strategies, potentially weakening its competitive position.

Operational Execution Challenges

Zeta is also grappling with a series of executional issues. The company has struggled to:

• Integrate "best-of-breed" data systems without compromising quality.

• Manage high-volume content workflows with a lean team.

• Coordinate a fragmented network of freelance contributors.

These factors have led to inefficiencies and suggest that the company is not yet operating at full potential. While these issues may be fixable, they point to growing pains that investors should monitor closely.

Data Security & Cyber Risk

The most concerning risks, however, lie in data security. Zeta has experienced data breaches that compromised sensitive customer information. As a business that relies on trust and data integrity, this is a serious red flag.

Worse still, the company depends on third-party vendors for data processing, increasing exposure to external vulnerabilities. In an era where cybersecurity threats are rising, Zeta must demonstrate robust and proactive defenses if it wants to maintain credibility in the market.

Updated Valuation: Discounted Cash Flow Model

Despite these risks, the stock’s steep decline has significantly improved the risk-reward profile. My proprietary discounted cash flow (DCF) model, which incorporates long-term cash flow forecasts, weighted average cost of capital, debt levels, and other key inputs, now pegs Zeta’s intrinsic value at $23.46 per share.

At the current price of $13.35, that implies significant upside—roughly 75%—if the business can execute and meet its long-term growth targets.

(Note: For a full breakdown of the DCF inputs, including detailed assumptions and stress testing, you can join my private member community for in-depth valuation videos and reports.)

Valuation Cross-Check: Forward Price-to-Earnings

To cross-check the DCF results, I also reviewed Zeta’s forward price-to-earnings (P/E) ratio. Currently, the stock trades at a forward P/E of 19, which is near its lowest levels since July 2021. Only in brief periods—like January 2024 and earlier this year—has it traded at cheaper multiples.

This suggests that the market has priced in a lot of bad news. From a historical and relative valuation standpoint, Zeta looks cheap.

Risks Are Elevated—But So Is the Margin of Safety

To be clear: this is not a low-risk investment. Zeta faces operational, legal, and reputational hurdles. Broader macroeconomic uncertainty, including declining ad spend and cautious consumer behavior, is also weighing on results.

That said, these challenges are now better reflected in the stock price. While the company’s performance hasn’t justified the $20 price tag it carried in late 2024, at $13 per share, the bar for future success is significantly lower.

Final Verdict: Do I Still Rate Zeta a Buy?

Yes. I still believe Zeta Global is a Buy, and I actually like the opportunity more today than when I first recommended it in 2024. The key difference? Valuation.

Back then, the stock offered decent upside. Today, the margin of safety is stronger, even when accounting for the heightened risks. If you’re a long-term investor with a tolerance for volatility and execution risk, Zeta is worth a second look.

Disclaimer: I want to make it clear that I am not a financial advisor, and nothing I say is intended to be a recommendation to buy or sell any financial instrument. Additionally, it's important to remember that there are no guarantees or certainties in trading or investing, and you should never invest money that you can't afford to lose.

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