Shutterstock’s acquisition of GIPHY is a strategic step in…

Shutterstock’s acquisition of GIPHY is a strategic step in…

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  • JMP Securities Analyst Andrew Boone claims Shutterstock Inc SSTK with a market perform.
  • Shutterstock agreed MetaPlatforms, Inc META to acquire GIPHYa growing library of conversational content (primarily GIFs), for $53 million in net cash, with the transaction awaiting closing in June 2023.
  • The transaction creates another corporate product for Shutterstock to sell. This gets it into the advertising market, while the analyst sees the purchase as opportunistic given that it was made possible by the company’s relationship with Meta and pushed by regulators.
  • While Boone appreciates GIPHY’s optionality and low purchase price, he remains primarily focused on Shutterstock’s core market business and faces increasing competition from generative AI.
  • To be clear, Shutterstock is seeing continued demand from enterprise customers, including data sales to train AI models, but as its e-commerce revenue (56% of Q1 23 revenue) grew 4% year over year in its most recent quarter excluding exchange rates, he is hoping for better stability from SMEs and prosumers before they turn more bullish on equities.
  • With content scalable and growing, and no cost to platforms connecting to it, Boone expects GIPHY to continue adding partners and expanding its impressions as he sees it as a leading platform for GIFs.
  • While valuation is at a discount to peers given the potential disruptions from generative AI, the analyst believes the stocks are fairly valued at current levels.
  • Needham Analyst Bernie McTernan confirms Shutterstock as a buy with a price target of $90.
  • The analyst sees this acquisition as a relatively cheap call option at a low valuation as META was forced to sell by UK CMA after buying it for $400m.
  • SSTK does not expect GIPHY to do this Generate revenue in fiscal year 23. Still, the benefit is to create a native advertising platform for advertisers, reaching 1.7 billion DAUs across social media and other platforms, with distribution and premium…



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