Enterprise marketing software company Marin Software Incorporated (MRIN) is known for its flagship MarinOne platform, which facilitates advertising campaigns internationally. On June 23, the San Francisco-based company added Instacart’s advertisement ability to the MarinOne platform to facilitate direct connections between brands and customers at the point of sale. Shares of MRIN have soared 918.2% since this announcement.

Instacart is a leading online grocery platform that operates in North America, partnered with more than 600 national, regional and local retailers to offer self-service and managed ad services to more than 2,500 CPG brands.The platform’s integration with MRIN software seeks to facilitate MRIN’s goal of  optimizing more than $40 billion in digital advertising spending  internationally.

Regarding this integration, MRIN’s Chairman and CEO Chris Lien said, “As the leading online grocery platform in North America, Instacart is a must-have part of digital marketing strategies. We are delighted to give advertisers on Instacart the power of MarinOne to maximize return on their investment.”

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Here’s what we think could shape MRIN’s performance in the near term:

Caught in Meme Stock Craze

MRIN has become a Reddit-favorite stock because  retail investors expect the company to become a dominant player in its industry. The stock is regularly  discussed in popular Reddit forums r/pennystocks and r/stocks.

Given the rising popularity of digital and social media advertising, retail investors expect MRIN to grow substantially in the coming months. As online advertising replaces traditional means of advertising, MRIN is expected to become an established player in this space, boosted by its innovative prowess and integration with other popular platforms.

Weak Financials

MRIN’s revenues declined 27.2% year-over-year to $6.31 billion in its  fiscal first quarter, ended March 31, 2021. This can be attributed to a 36.4% decline in “subscription” revenues. Its gross profit declined 7.5% from the same period last year to $3.07 million. Its adjusted EBITDA came in at negative $2.29 million, while its loss from operations was  $2.45 million. Its net loss and loss per share stood at $2.21 million and $0.21, respectively. And its net cash outflow from operating activities increased 27.3% from the prior-year quarter to $2.24 million.

POWR Ratings Depict Uncertainty

MRIN has an overall C rating, which equates to Neutral in our proprietary POWR Ratings system. The POWR Ratings are calculated considering 118 different factors, with each factor weighted to an optimal degree.

MRIN has an F grade for Stability, and C for Quality, Value, and Growth. MRIN’s negative beta justifies the Stability grade. The company’s trailing-12-month asset turnover ratio of is 16.4% higher than the industry average of 0.64%. However, its ROE and net income margin are negative, justifying the Quality grade.

Moreover, MRIN’s revenues declined at a rate of 26.7% over the past three years, while total assets declined 24.2% over this period. However, the company’s working capital rose 101.2% year-over-year, in sync with the Growth grade.

Of the 129 stocks in the D-rated Software – Application industry, MRIN is ranked #67.

Beyond what we’ve stated above, we have also rated MRIN for Value, Sentiment, and Momentum. To view all MRIN Ratings, click here. View the top-rated stocks in the Software – Application industry here.

Click here to check out our Software Industry Report for 2021

Bottom Line

MRIN is a highly speculative investment bet, as evidenced by its supernormal price gains and weak financials. While retail investors expect the company to grow substantially in the long run to emerge as an established player in the digital advertising space, we think it  could be wise to wait until the company generates positive earnings before investing in the stock.

MRIN shares were trading at $11.27 per share on Wednesday afternoon, down $6.03 (-34.86%). Year-to-date, MRIN has gained 457.92%, versus a 15.24% rise in the benchmark S&P 500 index during the same period.

About the Author: Aditi Ganguly

Aditi is an experienced content developer and financial writer who is passionate about helping investors understand the do’s and don'ts of investing. She has a keen interest in the stock market and has a fundamental approach when analyzing equities. More...

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