Buy, Sell or Hold Innodata Stock? Key Tips Ahead of Q1 Earnings

Zacks

Innodata INOD is scheduled to report first-quarter 2025 results on May 8.

For the first quarter, the Zacks Consensus Estimate for revenues is pegged at $58.66 million, suggesting a 121.36% rise from the year-ago quarter’s reported figure.

The Zacks Consensus Estimate for earnings is pinned at 20 cents per share, indicating an increase of 566.67% from the prior-year quarter’s reported figure.

Innodata has a positive earnings surprise history. In the last reported quarter, the company delivered an earnings surprise of 40.91%. Its earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 220.46%.

Innodata Inc. Price and EPS Surprise

Innodata Inc. price-eps-surprise | Innodata Inc. Quote

Earnings Whispers for INOD

Our proven model does not conclusively predict an earnings beat for Innodata this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. This is not the case here. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.

INOD has an Earnings ESP of 0.00% and a Zacks Rank #3 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Factors to Note for INOD Ahead of Q1 Results

Innodata approaches its first-quarter 2025 earnings report following an exceptional performance in the fourth quarter of 2024, where the company posted record-breaking 127% year-over-year growth and substantial profit improvements. While the strong momentum is expected to continue, several factors suggest investors should hold their positions or await a better entry point before adding to their stakes.

The recent beta launch of Innodata's Generative AI Test & Evaluation Platform, powered by NVIDIA technology, represents a strategic expansion of the company's AI services portfolio. This platform, showcased at NVIDIA GTC 2025 in March, aims to address enterprise needs for AI risk mitigation and performance optimization. While this initiative aligns with Innodata's growth strategy in the AI services market, the platform's full commercial release isn't expected until the second quarter of 2025, limiting its revenue impact on first-quarter results.

Innodata's strong relationship with its largest customer, which contributed significantly to the fourth quarter of 2024 results, is likely to have continued to drive growth in first-quarter 2025. The company previously announced additional programs valued at approximately $24 million in annualized run rate revenues with this customer. However, this concentration risk remains a concern, despite efforts to diversify the client base by expanding relationships with seven other Big Tech customers.

The company's forecast of 40% or more revenue growth for full-year 2025 suggests continued strong performance, but the projected reinvestment of cash from operations back into the business might have temporarily impacted profit margins in the first quarter. These investments, while positioning Innodata for sustained multi-year growth, could create near-term volatility in financial metrics.

Industry tailwinds from AI-driven capital expenditure among major tech companies are likely to have benefited Innodata in the first quarter of 2025, as the company continues to position itself as a key player in the growing AI services market. The company's strong balance sheet, with $46.9 million in cash at the end of 2024, provides flexibility to execute its expansion strategy while weathering any short-term fluctuations.

Investors should monitor how effectively Innodata is diversifying its customer base and commercializing new offerings like the AI Test & Evaluation Platform. While the long-term growth prospects remain promising, potential volatility associated with ongoing investments and customer concentration suggests a cautious approach ahead of the first-quarter 2025 earnings report.

INOD Price Performance & Stock Valuation

INOD shares have skyrocketed 467.5% in the trailing 12-month period, outperforming the Zacks Computer and Technology sector’s appreciation of 5.1% and the industry’s return of 7.5%.

1-Year Performance

While INOD stock trades at a premium with a six-month forward 12-month P/S ratio of 4.62x compared with the Zacks Computer – Services industry average of 1.75x, this premium valuation appears justified given the company's strong growth prospects and strategic positioning in the generative AI (GenAI) space.

INOD’s P/S F12M Ratio Depicts Stretched Valuation

Morgan Stanley has projected combined capital expenditures of $300 billion in 2025 and $337 billion in 2026 for Amazon AMZN, Alphabet GOOGL, Meta Platforms META and Microsoft on GenAI and large language model-enabled advancements. By focusing on Big Tech’s increasing investments in GenAI, Innodata has positioned itself as a key partner for data engineering, particularly in creating supervised fine-tuning data for training advanced AI models.

Investment Thesis

Innodata's investment case presents a mixed outlook ahead of first-quarter 2025 results. While the company delivered 127% growth in fourth-quarter 2024 and projects more than 40% revenue growth for 2025, investors should exercise caution at current valuation levels. The beta launch of its NVIDIA-powered AI Test & Evaluation Platform represents future potential, but full commercialization won't occur until the second quarter. Customer concentration risk persists despite diversification efforts with other Big Tech clients. Planned reinvestment in operations may temporarily pressure margins, despite the strong $46.9 million cash position.

Conclusion

Innodata presents a cautious investment case with recent record growth juxtaposed against premium valuation and increasing competition in AI services. The unrealized first-quarter impact of its NVIDIA-powered platform, ongoing customer concentration risks, and planned reinvestments suggest potential near-term volatility. Investors should consider holding existing positions or awaiting a more attractive entry point following the first-quarter results.

This article originally published on Zacks Investment Research (zacks.com).

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This zero-day options craze could finally be coming to popular stocks like Nvidia and Tesla. Here's what to know.

MarketWatch

By Joseph Adinolfi

Nasdaq has asked the SEC for permission to list options tied to a handful of popular stocks that would expire on Mondays and Wednesdays

A surge in trading of so-called "zero days to expiry" - or "0DTE" - options has contributed to an options-market boom over the past few years, drawing in both sophisticated investors and amateur speculators.

During the trading week, investors have been limited to trading 0DTE contracts tied to stock-market indexes like the S&P 500 and a handful of popular ETFs, including the Invesco QQQ Trust.

But after a long wait, they could soon be coming for popular stocks such as Nvidia Corp. (NVDA) and Tesla Inc. (TSLA)

In a filing published late last week, Nasdaq Inc. officially asked the Securities and Exchange Commission for permission to expand offerings of option contracts tied to a handful of individual stocks. If the SEC signs off, the exchange would be allowed to list options tied to a select group of stocks that expire on Mondays and Wednesdays, giving traders two more opportunities per week to trade option contracts on the edge of expiration.

"It's probably been a long time in the making," Scott Bauer, CEO of Prosperity Trading and a former floor trader on a major options exchange, told MarketWatch.

Currently, options tied to individual common stocks only expire on Fridays, while contracts tied to some stock-market indexes and highly liquid ETFs have more frequent expirations.

Although a Nasdaq executive declined to comment on the exchange's plans, traders and industry experts who spoke with MarketWatch said that, if all goes well, contracts expiring on Tuesdays and Thursdays could soon follow.

"They're not pure 0DTEs in the sense that they're not listed every day, but it's getting pretty close," Garrett DeSimone, head of quantitative research at OptionMetrics, told MarketWatch.

See: 2024 was another record-breaking year for options trading. What's on tap for the industry in 2025.

What is a '0DTE' option?

Any option due to expire at the end of a session is considered a 0DTE contract. Technically, every option becomes a 0DTE on the last day of its life.

Traders who spoke with MarketWatch have said the appeal of these contracts lies in the small chance of an outsize gain. If the market pushes them into the money before they expire, it could lead to a large windfall for a trader who had bought them minutes or hours earlier.

Back in 2022, popular exchange operators like Cboe Global Markets expanded offerings tied to the S&P 500 and a few popular ETFs to allow traders to trade 0DTE contracts every day of the trading week. The change helped accelerate a boom in options trading that had begun shortly before the COVID-19 pandemic.

The average daily trading volume in these extremely short-dated contracts has been climbing steadily since. 0DTE volumes in S&P 500 index options hit a record during the first quarter of 2025, according to Cboe data.

A Cboe analyst estimated that roughly 50% to 60% of the average daily activity in S&P 500 0DTE contracts involves amateur individual investors, although the exact share is difficult to determine precisely.

Their rise has coincided with a surge in activity across the broader U.S. equity-options market. According to the Options Clearing Corporation, the industry's main clearinghouse, more than 12 billion contracts changed hands in 2024, setting a record for the fifth year in a row.

It appears another record could follow in 2025, with the industry already on track to top 14 billion contracts traded, according to Henry Schwartz, vice president of market intelligence at Cboe.

'We're working closely with everybody'

The SEC has up to 240 days to approve or deny Nasdaq's request once the filing is published in the Federal Register, which had not yet happened as of Tuesday morning. A representative for the SEC didn't return a request for comment from MarketWatch.

Once approved, these options could start trading within days.

Nasdaq's decision to request the change was the culmination of a lengthy process by exchanges, brokerage platforms, market makers and other options-industry players. The goal was to figure out the best way to introduce more short-dated contracts tied to shares of individual stocks in a manner that would minimize risks for the industry and its customers.

Ultimately, the exchange decided that Monday and Wednesday contracts wouldn't be listed on any day when the underlying company is due to report quarterly earnings. This should help to limit the chances that volatile swings in stocks after the closing bell could complicate trade settlements, a Nasdaq representative said.

"We're working closely with everybody to make sure we're doing this in a safe and responsible way," said Greg Ferrari, a senior vice president at Nasdaq within the market platforms division.

The changes proposed by Nasdaq would only allow Monday and Wednesday expirations for a handful of stocks and one additional ETF. As of January 2025, only contracts tied to Nvidia, Tesla, Apple Inc. (AAPL), Microsoft Corp. (MSFT), Broadcom Inc. (AVGO), Alphabet Inc. (GOOGL), Meta Platforms Inc. (META) and Amazon.com Inc. (AMZN) would be eligible for the Monday and Wednesday listings, along with the Financial Select Sector SPDR Fund ETF XLF.

'Lottery tickets'

Options-market activity has been trending toward shorter-dated contracts for years, said OptionMetrics' DeSimone.

At the same time, the advent of free-to-trade electronic brokerages has helped inspire a new generation of amateur individual investors to try their hand at options trading.

Making it easier to trade 0DTE tied to individual stocks could accelerate both of these trends, DeSimone said. While institutional players still dominate index options, individual traders are more active in the single-stock space, DeSimone said.

DeSimone cautioned that anybody interested in trading these products should keep their risk profile in mind. Some in the industry have likened 0DTE contracts to "lottery tickets" that offer a small chance of a large payout, and a high likelihood that the contract will expire worthless.

JJ Kinahan, CEO of IG North America, parent of brokerage tastytrade, pushed back against this characterization, calling it hyperbolic. He said many investors trade 0DTE options as part of spread strategies involving more than one contract, allowing them to more precisely manage their risk. Nasdaq and others have said that 0DTEs can help large traders more tactically manage their risk.

"I think people are excited for the opportunity, but again I think we'll need to do some more education regarding exercise and assignment risk," Kinahan said. "We have to continue to educate as to what the risks of these are, especially after the close."

-Joseph Adinolfi

This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.

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President Capital Adjusts Price Target on Meta Platforms to $675 From $780, Maintains Buy Rating

MT Newswires

Meta Platforms

-1.30%

Meta Platforms has an average rating of buy and mean price target of $700.57, according to analysts polled by FactSet.

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Daiwa Adjusts Price Target on Meta Platforms to $719 From $800, Maintains Buy Rating

MT Newswires

Meta Platforms

-1.30%

Meta Platforms has an average rating of buy and mean price target of $700.57, according to analysts polled by FactSet.

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Epic Games the biggest winner from Apple contempt ruling - Jefferies

Investing.com

Investing.com - A recent ruling by a U.S. judge ordering Apple (NASDAQ:AAPL) to immediately open up its lucrative App Store to more competition represents the biggest win yet for app developers aiming to avoid paying fees the iPhone-maker, according to analysts at Jefferies.

In a decision late last month, U.S. District Judge Yvonne Gonzalez Rogers said that Apple had knowingly failed to comply with a 2021 injunction which was designed to give app firms more ability to drive consumers towards possibly cheaper payment options.

Apple and one of the tech giant’s executives were also referred to federal prosecutors for a potential criminal contempt investigation, adding that Apple had delayed and purposefully misled the court in order to "maintain a revenue stream worth billions" of dollars.

Gonzalez Rogers said Apple must end a new 27% fee it had imposed on app developers when Apple customers made purchases outside the App Store. Apple was also banned from using so-called "scare screens" which looked to keep consumers from using third-party payment options.

California-based Apple, which has denied being in violation of the court’s order, filed an appeal on Monday challenging Gonzalez Rogers’ decision.

In a note to clients, the Jefferies analysts said the latest developments in the court case -- which was first brought by Epic Games, the maker of the online video game Fortnite -- were the "biggest yet in favor of Epic" and had "sweeping implications for the entire app ecosystem".

The brokerage noted that giving consumers more non-App Store options will increase the number of steps needed to confirm payments, especially compared to Apple’s quick, one-tap option. But the analysts said that the savings for app developers, who had been charged fees by Apple, "more than makes up for it".

Epic Games is tipped to be the biggest winner from the changes, Jefferies said, adding that app advertising networks -- such as Applovin, Unity Software, and Meta Platforms (NASDAQ:META) -- also stand be major beneficiaries. Subscription businesses like Spotify (NYSE:SPOT), Netflix (NASDAQ:NFLX) and Match Group (NASDAQ:MTCH) may be bolstered as well.

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Should You Buy, Sell, or Hold AppLovin Stock Before Q1 Earnings?

Zacks

AppLovin Corporation APP will report its first-quarter 2025 results on May 7, after the bell.

The Zacks Consensus Estimate for earnings in the to-be-reported quarter stands at $1.45, indicating 116.4% growth from the year-ago reported quarter. The consensus estimate for revenues stands at $1.38 billion, implying 30.2% year-over-year growth. There has been no change in analyst estimates or revisions lately.

The company has an impressive earnings surprise history. Earnings surpassed the Zacks Consensus Estimate in all the trailing four quarters, with an earnings surprise of 23.5%, on average.

Q1 Earnings Beat Seems Unlikely for APP

Our proven model doesn’t conclusively predict an earnings beat for APP this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter.

APP has an Earnings ESP of 0.00% and a Zacks Rank #3. (Find the latest EPS estimates and surprises on Zacks Earnings Calendar.)

You can see the complete list of today’s Zacks #1 Rank stocks here.

Software Platform Should Drive Performance Growth

We expect year-over-year improvement in the company’s top line in the to-be-reported quarter to be driven mainly by an increase in the Software Platform. The consensus estimate for the Software Platform revenues is pegged at $1.05 billion, indicating 54.3% year-over-year growth. The consensus mark for Appsrevenuesis pegged at $331.7 million, suggesting a 12.7% year-over-year decline.

The consensus mark for the Software Platform’s adjusted EBITDA is pegged at $829.4 million, suggesting 68.6% year-over-year growth. APP’s adjusted EBITDA is expected to decrease 16.8% year over year.

APP Stock is in a Great Mood

APP has rallied a staggering 300% over the past year, easily outpacing the broader industry's 27% gain. In contrast, competitors like Alphabet GOOGL and Meta Platforms META have delivered mixed results. Alphabet shares slipped 2% during the same time frame, highlighting weakness in parts of its ad-driven business. Meanwhile, Meta Platforms climbed 29%, benefiting from its strong position in social media advertising. Both Alphabet and Meta Platforms remain major players, but AppLovin’s specialized platform is delivering superior returns in this niche.

Investment Risk and Rewards for APP

AppLovin's recent financial results underscore its strong fundamentals and impressive growth trajectory. The company continues to benefit from its AXON 2.0 technology and strategic expansion within the gaming and in-app advertising sectors. In the fourth quarter of 2024, revenues surged 44% year over year and 14% sequentially, reflecting strong market demand. Adjusted EBITDA jumped 78% year over year and 17.5% sequentially, showcasing improved operational efficiency. Net income skyrocketed 248% from the prior year and 38% sequentially, demonstrating APP’s ability to translate revenue growth into significant profitability.

For the full year 2024, revenues climbed 43% year over year, while adjusted EBITDA surged 81%, underscoring AppLovin’s ability to seize market opportunities while maintaining efficiency. Looking ahead, management has guided for $1.4 billion in the first quarter of 2025 sales, slightly above the Zacks Consensus Estimate of $1.37 billion. Historically, AppLovin has consistently beaten earnings expectations, increasing the likelihood of another outperformance.

However, potential risks persist. The growth in the in-game advertising segment may face challenges, and the uncertain impact of the company’s ventures outside gaming could introduce volatility. Nonetheless, AppLovin's strategic focus on innovative technology and expansion within the gaming industry positions it well for sustained growth. With AXON 2.0 driving operational efficiencies and a diversified approach to revenue generation, the company is poised to maintain its growth momentum, making it an attractive option for long-term investors.

Hold Recommendation

The stock has delivered exceptional growth over the past year, with the company showing robust financial results driven by its Software Platform and AXON 2.0 technology. While first-quarter 2025 earnings are expected to show strong year-over-year growth, the absence of a positive Earnings ESP and modest decline in App revenues suggest potential volatility. Still, APP’s consistent earnings beats, operational efficiency, and leadership in mobile advertising make it a compelling long-term play. Given near-term uncertainty around earnings and potential sector risks, a Hold is prudent as investors await clearer post-earnings direction and sustained performance confirmation.

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research

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Goldman Sachs cuts S&P 500 cash spending outlook as uncertainty rises

11thestate

Goldman Sachs slashed its 2024 cash spending forecast for S&P 500 firms to $3.8T, citing rising policy uncertainty and weaker earnings. Buybacks and M&A are expected to take the biggest hit. Capex growth remains strongest in AI-heavy firms like and .

At the same time, lost over $50B in market value after Donald Trump publicly labeled Facebook an “enemy of the people,” sparking concerns of market manipulation or gross negligence. You can find more details about it here and stay updated on any future changes.

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