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Here's Why Digital Turbine Stock Jumped Over 17% in September

By Jon Quast – Oct 5, 2021 at 5:02PM

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There were multiple events that might have caused investors to notice this company's stellar growth.

What happened

Shares of Digital Turbine (APPS -10.55%) jumped 17.6% in September, according to data provided by S&P Global Market Intelligence, bucking a market downtrend during the month. The advertising technology company might have gained increased visibility during the month thanks to being added to a certain index. But the stock may have also gone up because of what the CEO had to share with investors on Sept. 15.

So what

In August, it was announced that Digital Turbine would be added to the S&P MidCap 400 index. However, its addition didn't happen until Sept. 7. Therefore it's possible that some investors were just discovering the company for the first time in early September as a result of this news. 

One person shows another person a rising stock chart on a computer.

Image source: Getty Images.

However, it's more than just increased exposure for Digital Turbine. Index funds that track the performance of the S&P MidCap 400 had to buy shares of Digital Turbine for their funds, giving the stock a fresh influx of buyers. This is a short-term factor and likely started in August. But it certainly was a contributing factor for Digital Turbine's outperformance in September as well.

Digital Turbine stock made its biggest jump in the second half of September. This might be because CEO Bill Stone made a presentation at a conference that was very bullish, specifically about the opportunity he sees with its SingleTap product, which makes it easier to download apps. Of course, you expect CEOs to be bullish about their companies; it would be a problem if they weren't. But prior to the conference, Digital Turbine stock was 34% down from its all-time high. So maybe Stone's upbeat presentation was enough to get investors excited again.

APPS Chart

September returns for Digital Turbine stock compared to the S&P 500. APPS data by YCharts.

Now what

Digital Turbine has grown by leaps and bounds via acquisitions. In the first quarter of its fiscal 2022, revenue from all of its businesses combined for $292 million, an annualized run rate of over $1 billion. For perspective, the company crossed $100 million in annual revenue in fiscal 2019. But not only is Digital Turbine growing at this eye-popping rate, it's also doing it profitably with $14.3 million in net income in the first quarter, according to generally accepted accounting principles (GAAP). 

The growth-by-acquisition strategy is often risky. But in Digital Turbine's case, it does seem to be building something greater than the sum of its parts. That's good for shareholders.

What's also good for shareholders is the growth of Digital Turbine's SingleTap product. A little over a year ago, this product generated a mere $1 million in quarterly revenue. Now it's generating annual revenue north of $100 million. And the company just signed a deal with Samsung to take this product into new markets around the world, which could be a further catalyst for growth.

Jon Quast owns shares of Digital Turbine. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Stocks Mentioned

Digital Turbine Stock Quote
Digital Turbine
APPS
$15.60 (-10.55%) $-1.84
S&P 400 Index - MidCap Price Return (USD) Stock Quote
S&P 400 Index - MidCap Price Return (USD)
^MID

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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