Why Rocket Fuel, Inc. Shares Soared Today

Is Rocket Fuel's jump meaningful or just another movement?

Steve Symington
Steve Symington
Jun 23, 2014 at 4:53PM
Technology and Telecom

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 Rocket Fuel, Inc. (NASDAQ:FUEL) surged as much as 10% Monday after the company launched a new programmatic advertising solution called "Audience Guarantee." 

So what: According to Rocket Fuel's press release, Audience Guarantee runs with "continuous optimization inputs" from both Nielsen's Online Campaign Ratings and comScore's validated Campaign Essentials, helping digital brand marketers more autonomously reach specific audiences across video, display, and mobile advertising exchanges.

And for those skeptical of its claims, Rocket Fuel states several leading brands have already seen promising results. Those brands include Denny's, which was able to use Rocket Fuel's Audience Guarantee to drive a 33% lift in brand consideration among males 25-54, while also delivering "on-target reach with consistent performance 60% better than market norms."

Now what: Simon Hayhurst, Rocket Fuel's senior VP of product and business development, added, "Until now, brand marketers have often had to resort to a 'spray-and-pray' method of video advertising that wastes more than half the budget. [...] With the addition of Audience Guarantee, total communications planning becomes easier for our customers since our platform not only outperforms on audience accuracy, but also optimizes brand lift for specific audiences."

Remember, Rocket Fuel isn't profitable on a trailing-12-month basis, and shares don't exactly look cheap trading around 85 times next year's estimated earnings. But that's also not entirely uncommon for a fast-growing company on the cusp of profitability. If Audience Guarantee's value proposition proves attractive to digital marketers, it could be just what the company needs to push it over the edge.