Founder and CEO Yaniv Sarig signals confidence in ATER’s outlook with new compensation election for 2023
Shares of technology-enabled consumer products platform provider Aterian Inc (NASDAQ:ATER) closed the trading day with a hefty 37.4% gain after hitting an intra-day high of $1.61(+65.9%) by lunch before day traders banked profits in the afternoon.
The spike of investor sentiment followed a bullish fourth quarter guidance update with a twist from Co-Founder and CEO Yaniv Sarig. ATER shares continued their momentum in after-hours trading, rising a further +4.5%.
Q4 2022 hedge fund letters, conferences and more
In the fourth quarter trading update, Aterian told investors that it expects to report net revenue of $54 to $55 million for the fourth quarter and full year net revenue of $220 to $221 million.
The updated fourth quarter guidance represents a 9% upgrade at the mid-point when compared to the previous guidance range of $45 to $55 million. Fintel journalists highlighted the fourth quarter initial expectations in a November article.
Co-Founder and CEO Yaniv Sarig discussed how the firm remains on track in its efforts to liquidate higher cost inventory in order to protect market share and reach their target for a sustainable contribution margin.
Sarig added “We continue to believe we are on the path to achieving Adjusted EBITDA profitability in the second half of 2023”
Sarig also enticed investors with his bold decision to receive 80% of his 2023 in the form of restricted ATER stock. Aterians CEO called the move “a testament to my confidence” in the stock.
Analyst Brian Kinstlinger from Alliance Global Partners remained bullish on ATER’s outlook after the trading update but lowered his ‘buy’ recommendation target from $4.00 to $2.50 due to a lower applied sales multiple.
Alliance Global thinks Aterian’s revenue upside in the trading update came from quicker inventory liquidation than first expected. The firm expects losses from liquidating will continue through the first quarter of 2023 but should benefit the company in the second half along with lower shipping container pricing.
When analysing sentiment from sell-side institutions, Fintel’s consensus target price of $2.68 suggests there could be as much as 234% upside to the share price this year.
The chart provided to the right shows the forward quarterly and annual revenue estimates for ATER. The street expects revenue to sink over 2023/24 before returning to a path back towards growth in 2025.
Research on the Fintel platform picked up several call options purchases for ATER on Tuesday after the news release. These were executed at spot prices ranging from $1.245 to $1.59 at $1.5 and $2 strike prices.
Sentiment in the options market remains bullish as indicated by Fintel’s 0.19 put/call ratio for ATER. This sentiment indicator assesses all open put and call option demand for the stock over the last 3 months. A ratio of 0.19 indicates that open call interest significantly outweighs put open interest.
A summary of the call options trades were provided below:
Aterian will next update investors when releasing audited full year results in March.
Article by Ben Ward, Fintel
