Cardlytics ($CDLX): Timing of Announcements, Convertible Senior Notes, Updated Projections (Updates #160 - #161)

New notes on the possible timing of announcements, the 2025 convertible senior notes, updated liquidity analysis / dilution calculations / future value per diluted share vs today's price.

Apr 07, 2023

∙ Paid

Market Cap as of 4.7.2023: ~$5.97/ Share x 33.6M Shares ~ $201M Market Cap.

In update #159 I provided updated liquidity analysis based on the updated guidance for Q1 + the higher stock price that could be used for the Bridg earnout. This analysis also included the calculations for potential future dilution, and the corresponding future value per diluted share (vs the stock price).

I have used this analysis to get comfortable with CDLX’s liquidity position + potential future returns under what I view are conservative estimates of future dilution.

I wanted to provide another projection (#5) in addition to those 4 provided in update #159. Projection #5 (in update #160, and included at the end of this post) is with CDLX paying 100% cash for the 2nd Bridg earnout payment.

Once CDLX gets past the dispute, I think some may then begin to focus on the 2025 convertible senior notes. Therefore, I included in these notes (update #160, and included at the end of this post) why I am less concerned about these, and how CDLX can handle them before maturity over 2 years from now.

I continue to believe the downside that many focus on has a very low probability of occurring, given everything that has been discussed in the Research Notes the last few weeks (included in the last 7 update emails for updates #133-139, #140-144, #145-149, #150-153, #154-155, #156-157, #158-159), and that downside has decreased further with the updated guidance and higher stock price (given its impact on the 2nd Bridg earnout payment).

While I prefer to wait longer between update emails for the CDLX Research Notes, I want to make sure I deliver timely information to all of you with access to the Research Notes, especially given the all-time-low stock price (as well given the quick price changes).

The CDLX Research Notes Updates

At this time, all of the following notes are under

Q4 2022 Earnings: Notes and Thoughts After the Call

For convenience, I copied over the corresponding sections of the Research Notes and pasted them at the end of this post.

Note, I do tweet out when I make an update to the Research Notes. Therefore, if you want more real-time updates, follow me on Twitter.

The order below matches how I copied them to the end of this post to read.

CDLX Research Notes: Update #160

Added on 4.5.2023

Updated Liquidity Analysis / Share Count / Future Value
- With 100% cash for 2nd Bridg earnout
- Multiple scenarios included
- Factors in recent LOC drawdown + earnouts + dispute + updated guidance + different stock prices for VWAP for 2nd earnout payment
- Estimates of future diluted share count (with earnouts + dispute + if equity raise)
- Estimates of future value per diluted share (vs today)
2025 Convertible Senior Notes
- How CDLX can handle

CDLX Research Notes: Update #161

Added on 4.7.2023

Interpreting the Possible Timings of Announcements
- Bridg Judgement
- Q1 Earnings
- Chase Rolling out New User Experience

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Research Notes contain information I have collected while researching, investigating, analyzing, and thinking through businesses, such as CDLX.

This is where I continue to add additional notes, observations, and thoughts.

Some of the notes have never been made, nor will be made, into official posts that are public to read.

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Cardlytics ($CDLX) Research Notes:

For all of you with a paid subscription, you can read some of the recent updates:

#158-159: (4.4.2023) Updated Guidance + Updated Liquidity Analysis and Projections
#156-157: (4.3.2023) Potential for New Banks Signing Soon and/or Remaining Banks Moving to the New Ad Server Ahead of Schedule, Possibilities and Potential Impact of Images
#154-155: (3.30.2023) How Bridg Can Lower FI Revenue Share, My Latest Large Purchases of CDLX with Leverage
#150-153: (3.27.2023) Possible Upcoming Announcements that Could Increase the Stock Price, New User Experience on My Chase Account, Less-Considered Liquidity Resources
#145-149: (3.24.2023): PacWest Deposits and LOC, Bridg Dispute, Resignation of CFO
#140-144: (3.20.2023) Why I Bought More
#133-139: (3.12.2023) Liquidity Analysis, Prior Use of SVB, 22Q4 Earnings, and More

Carvana ($CVNA) Research Notes:

Carvana CVNA Qualitative Research Notes Swany407 Research Notes Analysis Austin Swanson, 2018 Analyst Day, Competition, CarMax, Vroom, Shift, AutoNation, GM, Local, Dealers, and more, Disadvantages, selection, delivery, inspection and reconditioning, IRCs, Financing, Vehicle Service Contracts, VSC, Extended Warranties, GAP, Fees, Commission, Site Visits, Footprint, capacity, size, processes, root, insurance, hertz, new cars, drivetime, silverrock, blueshore, short thesis, Twitter, resources, Valuation, Market Penetration, Total Addressable Market, SG&A, Valuation, Intrinsic Value, Advertising, Securitizations, Operating Leverage, Retail Margin, Gross profit per unit, GPU, $CVNA, Austin Swanson, Carvana CVNA Quantitative Research Notes Swany407 Research Notes Analysis Austin Swanson, 2018 Analyst Day, Competition, CarMax, Vroom, Shift, AutoNation, GM, Local, Dealers, and more, Disadvantages, selection, delivery, inspection and reconditioning, IRCs, Financing, Vehicle Service Contracts, VSC, Extended Warranties, GAP, Fees, Commission, Site Visits, Footprint, capacity, size, processes, root, insurance, hertz, new cars, drivetime, silverrock, blueshore, short thesis, Twitter, resources, Valuation, Market Penetration, Total Addressable Market, SG&A, Valuation, Intrinsic Value, Advertising, Securitizations, Operating Leverage, Retail Margin, Gross profit per unit, GPU, $CVNA, Austin Swanson

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For convenience, I copied over the corresponding sections of the Research Notes and pasted them directly below.

The Updates:

(#160) 4.5.2023: 2025 Convertible Senior Notes + Updated Liquidity Analysis / Share Count / Future Value (with 100% cash for 2nd earnout)

Projection 5: 100% Cash for 2nd Earnout

I wanted to provide another projection (#5) in addition to the 4 provided in update #159 (4.4.2023).

The following is with CDLX paying 100% cash for the 2nd Bridg earnout payment.

I have discussed this possibility in the past, and have used it in my prior analysis as well. The reason CDLX would do this is from having plenty of liquidity to do so, leading to not using stock at the lower prices today, leading to less dilution.

If CDLX wins the dispute, and pays the 1st earnout as expected (the first 4 columns of results) then Chase has plenty of liquidity to do 100% cash for the 2nd (as seen in the row of liquidity following both Bridg earnouts). CDLX even has enough liquidity to do 100% cash for the 2nd earnout if they lose the dispute and pay more on the 1st earnout (seen in the last 4 columns of results).

This is even more possible this week vs the past, given the updated guidance, leading to less cash burn, so more liquidity. And if the 2nd earnout comes in lower than expected (which is possible, and could be announced soon), it leads to even less cash needed (as seen in the results below).

Here are the results:

Swanson Investment Research