The Tremor International (LSE:TRMR) share price surged strongly on Monday 30 November to hit levels not seen since 2018.
One specific piece of news lit a fire underneath the UK advertising and marketing company. And the share price shot up by over 25%.
But why did it jump so far so fast? It’s not exactly a household name, after all. Why the sudden optimism about the fortunes of this £300m market cap company?
Downturn
Tremor International is one of the 100 largest businesses on London’s AIM market. It shares that status with star names like Boohoo, ASOS, and Fevertree.
In June, the Tremor International share price fell sharply when the company said trading had been “severely impacted” by the pandemic.
Customers were taking an axe to their advertising budgets in a bid to save money. Tremor bosses added that it was “too early” to suggest an outlook for the company for the year.
Stock markets hate uncertainty. Even with the first Covid wave tailing off at the time, the disappointing result really did a number on the share price.
Tremor share price rises
Revenues for the first half of 2020 would be $131m to $135m, the company said in June. This figure was nearly 30% less than the market expected. This result also pointed to an underlying loss of up to $6m for the advertising firm.
But a trading update just put out on turned everything around. Suddenly the glass appears to be half-full, and not half-empty.
“Tremor continues to drive substantial customer momentum in the second half of the current financial year,” the company said in the market update. It added that its team had “demonstrat[ed] strong organic growth despite the impact of Covid-19“.
Revenue growth is now expected to be 37%-43% higher in H2 2020 than in H2 2019. That’s some turnaround. From the pessimism at the depths of Covid lockdowns to this? No wonder the Tremor International share price soared today.
Many other businesses are now also suggesting a faster than expected bounce-back to profitability. That’s based on the possibility that Covid-19 vaccines might allow a return to normal faster than expected.
Expect the unexpected
But the news for the Tremor International share price was even more unforeseen. “Revenues generated across October and November were the highest in the company’s history,” today’s trading update said.
Clearly, traders and investors today now think that the Tremor International share price has been improperly undervalued.
The company, led by CEO Ofer Druker, added in its market guidance that trading for the year would be “significantly ahead” of the range outlined in an October 2020 trading statement.
Tremor said it expects revenues to be around $50m higher at $390m-$400m compared to the update in October. It also expects adjusted earnings at a whopping $20m higher that October’s guidance.
One thing I’ve learned from reading regulatory news updates every day? If a company says its earnings, revenues or profits are going to be “significantly” anything — up or down — there will be a big price movement.
And that’s what happened to the Tremor International share price today.