Zeta Global Holdings: Can Revenue Momentum Justify a Re-Rating Amid Volatility?

In the ever-shifting landscape of tech investing, Zeta Global Holdings (ZETA) has emerged as a case study in the tension between operational performance and market sentiment. The company's recent financial results-marked by robust revenue growth and revised guidance-contrast sharply with a stock price that has fallen nearly 16% in the past quarter and 7.2% year-to-date. The question for investors is whether Zeta's underlying momentum, particularly in its advertising and data analytics segments, can catalyze a re-rating of its valuation despite persistent concerns over profitability and macroeconomic headwinds.

A Tale of Two Metrics: Revenue Growth vs. Earnings Pressure

Zeta's third-quarter 2025 results underscored this dichotomy. The company reported revenue of $337.17 million, a 25.7% year-over-year increase, outpacing analyst expectations of $328.09 million, as reported by Investing.com. Adjusted earnings per share (EPS) came in at 20 cents, exceeding the 18-cent forecast, but the net loss of 2 cents per share-driven by $3.63 million in quarterly losses-highlighted ongoing profitability challenges, according to Reuters. This pattern of revenue outperformance paired with earnings underperformance has become a recurring theme, with analysts debating whether Zeta's aggressive reinvestment in AI-driven ad platforms and customer data infrastructure is a short-term drag or a long-term catalyst.

The company's updated guidance for 2025 and 2026 adds nuance to this debate. Zeta raised its 2025 revenue forecast to $1.275 billion, a $11 million upward revision, and provided an initial 2026 target of $1.54 billion-a 21% organic growth rate, surpassing the market's 19-20% expectations, as reported in the Investing.com earnings call transcript. These projections suggest confidence in the scalability of its AI-powered ad tech stack, which has driven cross-sell opportunities across enterprise clients. Yet, the stock's post-earnings decline-falling 5.22% in after-hours trading to $17.22-reflects skepticism about whether these growth rates can translate into sustainable profitability, as noted in the Investing.com earnings call transcript.

Analyst Sentiment: Optimism Amid Caution

Despite the stock's volatility, analyst sentiment remains cautiously optimistic. A "Strong Buy" consensus prevails, with price targets ranging from $18 to $44, suggesting the market sees upside potential at current levels, according to Investing.com. Needham, for instance, reiterated its "Buy" rating with a $25 price target, citing Zeta's cross-sell strategy and accelerating revenue growth, as reported by Investing.com. However, this optimism is tempered by mixed EPS revisions. While revenue expectations have trended upward, earnings forecasts have remained stagnant, reflecting concerns about margin compression from heavy R&D spending and competitive pricing pressures in the ad tech sector, as reported in the Reuters earnings summary.

The disconnect between revenue and earnings expectations is further complicated by macroeconomic factors. As noted by Bloomberg analysts, broader market jitters over interest rate uncertainty and advertising budget shifts have dampened investor appetite for high-growth tech stocks, even those with strong fundamentals, according to the Reuters earnings summary. Zeta's stock, trading within its 52-week range of $10.69 to $38.20, appears to be caught in this crosscurrent of optimism and caution.

Valuation Dynamics: Undervalued or Overhyped?

The key to assessing Zeta's valuation lies in reconciling its forward-looking metrics with historical benchmarks. At $16.70, the stock trades at a discount to its peers in the ad tech space, despite reporting free cash flow growth of 83% in Q3 2025, as noted in the Investing.com earnings call transcript. Analysts at InvestingPro argue that Zeta is undervalued based on its Fair Value assessment, given its projected path to profitability and the scalability of its AI-driven offerings, as reported by Investing.com. Yet, skeptics counter that the company's reliance on reinvestment to sustain growth could delay breakeven and expose it to cash flow risks if advertising demand softens.

The 2026 revenue guidance of $1.54 billion-implying a 21% compound annual growth rate-could be a pivotal factor. If Zeta can maintain this trajectory while improving margins, the current stock price may represent a compelling entry point. However, investors must weigh this potential against the risk of a prolonged earnings trough, which could further erode confidence.

Conclusion: A Calculated Bet on Growth

Zeta Global Holdings presents a classic case of growth-at-a-reasonable-price, but one fraught with execution risk. The company's ability to convert revenue momentum into profitability will determine whether its valuation re-rating materializes. For now, the "Strong Buy" consensus and revised guidance suggest that the market is beginning to acknowledge Zeta's strategic strengths. Yet, the stock's volatility underscores the need for patience and a long-term perspective. Investors willing to tolerate near-term earnings pressures may find that Zeta's AI-driven transformation justifies the current discount-provided the company can deliver on its ambitious growth promises.