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Hype Asset of the Day | August 15th, 2022




ironSource Ltd. (NYSE: IS)

ironSource is an Israeli ad-tech company whose main purpose is to develop technologies to monetize and distribute apps and has its core products focused on the app economy. The company was founded in 2010 and currently has its headquarters in Israel. Having recently agreed to be acquired by Unity with a $4.4 billion acquisition deal that seems like it will be closed by the end of this year, ironSource has seen an increase in mentions by 135% over the last day, prompting investors to wonder what makes the company so well hyped. Currently, ironSource shares trade at $4.64.


Positive Hype

There are lots of reasons that ironSource has generated so much positive hype recently, here are some of them.

  • For its second quarter, ironSource earned $183 million in revenue, a solid 35% higher than the tally of the same quarter last year.


  • Additionally, the company brought in $623 million in revenue over the trailing 12 months. Of that, $139 million turned into free cash flow, and $63 million became net income.


  • Non-GAAP adjusted net income saw an even more dramatic rise, climbing by almost 54% to just over $61 million ($0.06 per share), which beat analyst expectations by $0.03 per share.


  • ironSource also has a very healthy balance sheet with $387 million in cash and deposits and no debt.


  • Unity has made an all-stock offer that represents a 74% premium for ironSource shareholders which is quite good for the company and is bordering on overpaying.

Negative Hype

Despite there being quite a few reasons that would make it a good idea to take a position in ironSource right now, it is also important to consider the downsides of this opportunity. Here is one of them.



  • The immediate future is up in the air, if Unity and ironSource cannot effectively integrate their operations, the value of this acquisition could be less than hoped.


Conclusion

ironSource's software is effective, the business is growing, and operations are profitable. In addition, the potential acquisition leaves the company with a large premium and could be very mutually beneficial in the future. However, nothing is final yet and there is still a chance that the deal might either get delayed or fall through. Nonetheless, even in comparison with its competitors right now, ironSource is doing good for itself and is quite the steal at its current share price.




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