Unconventional Value on MNTN, Inc.
Thesis
Gallagher initiated a position in MNTN after the recently listed shares fell almost 70% from their IPO level despite continued improvement in the underlying business. MNTN brings performance-based connected-TV advertising to small and medium-sized businesses through a simplified platform, with 95% of customers having never advertised on television before and customer growth remaining rapid. Revenue has more than tripled since 2021, gross margins have approached 80%, operating margins turned positive and the company has substantial net cash. Gallagher estimates roughly $100 million of EBITDA for the year and views a valuation below 5x EBITDA after net cash as compelling despite the competitive risks.
“you don’t have to believe much to earn a good return.”
Key risks
- Advertising technology is highly competitive and has historically produced few durable public-market winners.
- Large competitors including Amazon and AppLovin are expanding into connected television and may increasingly target SMB customers.
- The company is a recent IPO still developing a stable shareholder base.