Q1 Results and Downgrade Plague Rocket Fuel Inc (NASDAQ:FUEL)

Rocket Fuel Inc (NASDAQ:FUEL)

Rocket Fuel Inc (NASDAQ:FUEL) shares were trading above $5.00 earlier this week but a disappointing Q1 financial report and a downgrade by analysts at Credit Suisse from “Outperform” to “Neutral” has sent FUEL shares trading below $3.50 for much of the past two days. Rocket Fuel Inc (NASDAQ:FUEL) is a digital advertising company with operations in the USA and Europe. The reversal of FUEL shares is striking. FUEL shares were trading around $1.75 at the beginning of 2017 and by April were trading above $5.50 before pulling back below $4.50 but my early May shares were back to the $5.50 area.

On May 9, 2017 Rocket Fuel Inc (NASDAQ:FUEL) released their Q1 2017 financial statement and the rsults were below estimates that had already factored in a decline in performance. Non-GAAP was down 24% compared to last quarter – $3 million below analyst expectations. The GAAP net loss was (-$22.5) million or (-$0.49) per share. Rocket Fuel Inc (NASDAQ:FUEL) had previously warned that Q1 figures would exhibit weakness and slashed payroll to help soften the blow – reducing the workforce from 917 to 751. That guidance had already sent shares tumbling in February but they quickly recovered and continued their ascent.

Rocket Fuel Inc (NASDAQ:FUEL) leverages artificial intelligence (AI) and big data. Their proprietary approach is called Moment Scoring™. It is designed to result in a more efficient use of marketing dollars. The company claims that its marketing platform learns to predict what marketing actions to take with a particular person in a particular moment of time.

Yesterday, Rocket Fuel Inc (NASDAQ:FUEL) announced the launch of a platform to deal with malvertising – an issue that Rocket Fuel CEO says is a huge problem for the digital advertising industry. Rocket Fuel’s system applies artificial intelligence, big data, blacklists, and multiple anti-malware tactics to heavily scrutinize ads. By leveraging Google Cloud Vision API, Rocket Fuel can further identify and prevent for advertisers a substantial number of ads that fail to render or click-through correctly, as well as protect consumers against malicious intent. This approach is designed to produce significant savings for brands and agencies, allowing them to provide a better consumer experience.

I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. All information, or data, is provided with no guarantees of accuracy.

About the author: Steve Clark is a 23-year Wall St professional with stints in M&A, risk management, and algorithm trading.

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Steve Clark is a 23-year Wall St professional with stints in M&A, risk management, and algorithm trading. Steve keeps his head in the game by looking for, and writing about, small companies that often get overlooked by the big investment firms.

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