This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

The Deal: Millennial Shares Dive After Deal News

NEW YORK ( The Deal) -- Shares of Millennial Media (MM) tumbled more than 18% Wednesday, August 14, after the Baltimore-based company unexpectedly announced the acquisition of rival JumpTap to form a mobile advertising platform comparable to Google's (GOOG).

Under the mostly stock transaction, JumpTap shareholders will receive about 24.6 million shares of Millennial, or approximately 22.5% of outstanding shares, Millennial said August 13, after the close of regular trading.

A cash consideration of slightly under $12 million will also be made to shareholders of JumpTap, the second-largest independent mobile advertising platform in the U.S. behind Millennial. According to a statement issued by Millennial, JumpTap's enterprise value is approximately $232 million, based upon Millennial's August 9 closing price of $9.13 and the $12 million cash consideration.

"Long term, I think this makes sense because scale matters, and this brings scale," said James Cakmak, a Telsey Advisory Group analyst. "It makes them a much more formidable player. But there's a lot of questions that have surfaced in regards to timing and pricing and financial potential."

According to International Data figures, the new entity will push Millennial's mobile advertising market share to about 28.7% from 18%, putting its share at a level comparable to powerhouse Google, Millennial CEO and co-founder Paul Palmieri said in a Tuesday earnings call with investors.

Still, shares of Millennial, which trade on the New York Stock Exchange under the symbol MM, closed down 18.82%, to $6.90, on Wednesday.

Clearly, the JumpTap acquisition didn't sit well, because on Tuesday, Millennial reported second-quarter revenue of $57 million, a 45% jump from $39.4 million for the same period a year earlier.

Why the investor backlash? Cakmak explained that even though the scale advantages are clear, "the valuation for JumpTap could be slightly rich as compared to other ad-tech companies in the space."

He also said investors may be disappointed because, despite the 45% rise in quarterly revenue, an even-higher increase -- to $59.23 million, according to consensus estimates -- was expected.

The acquisition of Boston-based JumpTap is expected to close in the fourth quarter, subject to regulatory and shareholder approval. Upon completion, JumpTap CEO George Bell will join Millennial's board of directors as vice chairman.
1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
MM $0.00 0.00%
AAPL $93.74 0.00%
FB $117.58 0.00%
GOOG $693.01 0.00%
TSLA $240.76 0.00%


Chart of I:DJI
DOW 17,773.64 -57.12 -0.32%
S&P 500 2,065.30 -10.51 -0.51%
NASDAQ 4,775.3580 -29.9330 -0.62%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs