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Why Criteo S.A. Shares Popped

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Criteo S.A. (NASDAQ: CRTO  ) jumped more than 10% during intraday trading Thursday after the recently IPO'd performance display company reported encouraging third-quarter results.

So what: Quarterly revenue increased 57.8% to $153.13 million, which translated to a 97.2% increase in adjusted net income to $6.59 million. Revenue excluding traffic acquisition costs -- which management states is a "key measure" they use to evaluate operating performance and provide useful period-to-period comparisons for their core business -- grew 59.7% to $62.97 million.

In addition, Criteo stated it expects revenue excluding traffic acquisition costs should rise in Q4 to between $67.28 million and $69.97 million, good for a solid sequential gain of between 6.8% and 11.1%.

Now what: The obligatory 25-day quiet period for underwriter research reports following Criteo's IPO won't expire until November 23, so there are currently no analyst estimates available to compare. As it stands, however, the near-term pop is unsurprising considering Criteo's impressive growth along with the fact the stock was previously little changed from its IPO closing price at $31 per share.

Still, remember the barely profitable company is currently being valued at a lofty $1.9 billion. In the end, though, while I'd personally prefer to wait a few quarters to get a better handle on Criteo's long-term operations, I won't be surprised if the market continues to place a premium on its shares if Criteo can manage to maintain its torrid pace of revenue and earnings growth going forward.

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9/27/2016 4:00 PM
CRTO $36.07 Down -0.93 -2.51%
Criteo CAPS Rating: *****