Cardlytics Story

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CDLX -- USA Stock  

USD 121.37  2.66  2.14%

Cardlytics is currently generating 0.177% in daily expected returns and assumes 3.644% risk (volatility on return distribution) over the 90 days horizon. As many conservative investors are still indifferent towards current market risk, it is prudent, from our point of view, to break down Cardlytics' current volatility. We will inspect why some investors are closely monitoring Cardlytics' volatility.
Published over a month ago
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What to know before acquiring Cardlytics (NASDAQ:CDLX) based on its volatility?
This firm currently holds 184.51 M in liabilities with Debt to Equity (D/E) ratio of 1.23, which is about average as compared to similar companies. The company has a current ratio of 5.96, suggesting that it is liquid enough and is able to pay its financial obligations when due.
Volatility is a rate at which the price of Cardlytics or any other equity instrument increases or decreases for a given set of returns. It is measured by calculating the standard deviation of the annualized returns over a given period of time and shows the range to which the price of Cardlytics may increase or decrease. In other words, similar to Cardlytics's beta indicator, it measures the risk of Cardlytics and helps estimate the fluctuations that may happen in a short period of time. So if prices of Cardlytics fluctuate rapidly in a short time span, it is termed to have high volatility, and if it swings slowly in a more extended period, it is understood to have low volatility.
Please read more on our technical analysis page.

How important is Cardlytics's Liquidity

Cardlytics financial leverage refers to using borrowed capital as a funding source to finance Cardlytics ongoing operations. It is usually used to expand the firm's asset base and generate returns on borrowed capital. Cardlytics financial leverage is typically calculated by taking the company's all interest-bearing debt and dividing it by total capital. So the higher the debt-to-capital ratio (i.e., financial leverage), the riskier the company. Please check the breakdown between Cardlytics's total debt and its cash.

How Cardlytics utilizes its cash?

To perform a cash flow analysis of Cardlytics, investors first need to understand how to read the cash flow statement. A cash flow statement shows the amount of cash Cardlytics is receiving and how much cash it distributes out in a given period. The Cardlytics cash flow statement breaks down these inflows and outflows into different buckets, including operating activities, investing activities, and financing activities.
Cardlytics Net Cash Flow from Operations is fairly stable at the moment as compared to the past year. Cardlytics reported Net Cash Flow from Operations of (7.6 Million) in 2020

Cardlytics Volatility Drivers

Cardlytics unsystematic risk is unique to Cardlytics and usually not directly affected by the market or economic environment. An example of unsystematic risk is the possibility of poor earnings or a layoff due to coronavirus. One may mitigate nonsystematic risk by buying different securities in the same industry or by buying in different sectors. For example, if you have a position in Cardlytics you can also buy Chindata Group Holdings. You can also mitigate this risk by investing in the internet content & information sector as well as in companies having nothing to do with it. This type of risk is also called diversifiable risk and can be understood from analyzing Cardlytics important indicators over time. Here we run a correlation analysis between relevant fundamental ratios over at least ten year period to find a relationship in the way they react to changes in Cardlytics income statement and balance sheet. Here are more details about Cardlytics volatility.
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0.970.980.980.8-0.41-0.010.840.030.62-0.230.80.69-0.03-0.23-0.20.82-0.390.830.87-0.730.84-0.920.760.940.740.510.650.720.380.511.0-0.871.00.7-0.470.44-0.750.97-0.230.851.00.630.820.740.970.97
1.01.00.990.83-0.49-0.060.89-0.070.55-0.270.840.740.03-0.27-0.250.87-0.410.870.79-0.740.92-0.940.830.950.830.550.720.790.50.540.97-0.860.970.75-0.590.48-0.820.98-0.270.910.970.640.870.720.971.0
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Click cells to compare fundamentals

Cardlytics exotic insider transaction detected

Legal trades by Cardlytics insiders are very common, as founders, directors, or employees of any publicly traded firm often have stock or stock options. These trades are made public in the United States through the filing of Form 4 of the Securities and Exchange Commission. Below entry was recorded recently and is publicly available as an insider trade:
Cardlytics insider trading alert for general transaction of common stock by Scott Grimes, the corporate stakeholder, on 19th of April 2021. This event was filed by Cardlytics Inc with SEC on 2021-04-19. Statement of changes in beneficial ownership - SEC Form 4 [view details]   
Note, although insider trading is legal, in the United States, Canada, Australia, and Germany, for mandatory reporting purposes, corporate insiders are defined as a company's officers, directors, and any beneficial owners of more than 10% of a class of the company's equity securities.

An Additional Perspective On Cardlytics

The modest gains experienced by current holders of Cardlytics could raise concerns from investors as the firm it trading at a share price of 132.43 on very low momentum in volume. The company directors and management have been quite successful in maneuvering the stock at opportune times to take advantage of all market conditions in February. The stock standard deviation of daily returns for 30 days investing horizon is currently 3.64. The above-average risk is mostly attributed to market volatility and speculations regarding some of the upcoming earning calls from Cardlytics partners.
 2018 2019 2020 2021 (projected)
Interest Expense3.26 M548 K493.2 K506.18 K
Gross Profit54.68 M79.46 M91.38 M77.02 M

Cardlytics has a good chance to finish above $135 in 2 months

Current downside variance is at 12.44. Cardlytics shows above-average downside volatility for the selected time horizon. We advise investors to inspect Cardlytics further and ensure that all market timing and asset allocation strategies are consistent with the estimation of Cardlytics future alpha. Understanding different market volatility trends often help investors to time the market. Properly using volatility indicators enable traders to measure Cardlytics' stock risk against market volatility during both bullying and bearish trends. The higher level of volatility that comes with bear markets can directly impact Cardlytics' stock price while adding stress to investors as they watch their shares' value plummet. This usually forces investors to rebalance their portfolios by buying different stocks as prices fall.

Our Final Take On Cardlytics

While many of the other players in the internet content & information industry are either recovering or due for a correction, Cardlytics may not be as strong as the others in terms of longer-term growth potentials. To summarize, as of the 1st of March 2021, our latest 30 days buy-or-sell advice on the company is Sell. We believe Cardlytics is overvalued with low probability of distress for the next two years.

About Contributor

This story should be regarded as informational only and should not be considered a solicitation to sell or buy any financial products. Macroaxis does not express any opinion as to the present or future value of any investments referred to in this post. This post may not be reproduced without the consent of Macroaxis LLC. Macroaxis LLC and Achuva Shats do not own shares of Cardlytics. Please refer to our Terms of Use for any information regarding our disclosure principles.

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