Digitalbox Shares Surge 40%, What Now?

Shares of digital media business Digitalbox (LON: DBOX) jumped over 58% in early Thursday as investors reacted to the news that it expects revenue and EBITDA for the year to be significantly ahead of market consensus.

Analyst consensus for Digitalbox, which owns Entertainment Daily, The Daily Mash and The Tab, forecasted £700k EBITDA, with expected revenue of not less than £3.3m.

However, trading across Digitalbox's 3 brands has been stronger than anticipated in the second half of the year, representing the company's most significant trading period. It follows a positive H1 which saw the company report a 37% rise in revenue from the previous year.

“The positive trend in the UK mobile advertising market has continued, contributing to the revenue overperformance, alongside some very strong traffic,” the company told investors. 

“Coverage of seasonal TV stalwarts Strictly Come Dancing and I'm A Celebrity drove significant audience on Entertainment Daily alongside The Daily Mash's spin-off show Late Night Mash which debuted on Dave and reporting on Netflix phenomenon Squid Game engaged readers of The Tab,” they added.

In the short term, Digitalbox shares are trading around 58% above Wednesday's close at 11.1p as the market prices the jump in revenue. However, in the medium to long term, investors will need to assess if the uptick in the UK mobile advertising market will be sustained into 2022 and beyond. 

The shift to mobile content has been evident for some time, and the dominance of streaming apps such as Netflix, Disney+, Amazon Prime, and many others only solidify that claim. It will be up to Digitalbox to continue growing its market share and viewer base to build on this year's success.

Should you invest in Digitalbox shares?

Digitalbox shares are traded on the London stock exchange's AIM market (the alternative investment market), which is the submarket specifically for smaller companies. AIM stocks are attractive to investors as they have tax advantages and smaller companies have the potential to benefit from rapid growth. But are Digitalbox shares the best buy? Our stock market analysts regularly review the market and share their picks for high growth companies