$1.24
$4.25
bear $1.24
base $3.24
bull $4.25
margin of safety $1.60
market price* $3.44
Taboola runs an advertising network that places paid recommendations, mostly below articles, on thousands of websites and apps, including Yahoo, Microsoft, NBCUniversal, Business Insider and, since mid-2026, Fox News. Advertisers pay Taboola, mostly through its Realize platform launched in February 2025. Taboola keeps part of each payment and passes the rest to the publishers who show the ads. Revenue grew from $1.19 billion in 2020 to $1.91 billion in 2025. Most of that step came in 2024, when Taboola obtained the exclusivity promised under its 30-year agreement with Yahoo, signed in November 2022. Yahoo was paid in shares, not cash: 84.7 million shares issued in January 2023, then worth about $288 million. How we measured earnings. We start from operating cash flow and strip out working-capital swings. We then subtract stock-based pay, which is a real cost to shareholders, and the capital spending needed to keep the platform running. On that basis owner earnings were about $63 million in 2024 and $81 million in 2025, or $0.18 and $0.25 per share. In 2021-2023 they were near zero or negative. The Yahoo agreement asset is written down by about $16 million a year. That write-down is not a cash cost, because the asset was paid for in shares already counted in the share total. Instead of charging it against today's earnings, we let each case decline toward the end of the Yahoo term. Because the Yahoo deal reshaped the business, we measure it from 2024 onward. With cash interest added back, so that debt can be subtracted separately, the business generated about $77 million in 2024 and $86 million in 2025. What changed in 2026. In February Taboola settled a lawsuit it had brought, receiving about $77 million net of fees. That is one-time money and we exclude it from earnings. In the second quarter, revenue came in below the company's own forecast for two reasons. Google ended the Explore More product faster than expected, and Taboola dropped a group of poorly performing publishers, mostly in Greater China. It also wrote off $12.2 million it had prepaid to publishers and does not expect to recover, and it cut staff in April. Most of the first-half fall in cash profit traces to these one-time costs and to higher equipment spending. Loss of the Explore More product is permanent, however. The strong Israeli shekel, which raises costs because much of Taboola's staff is in Israel, cut about $7.5 million from second-quarter profit. Owner earnings grew 28% in 2025. We nonetheless start the base case at $75 million, below 2025's level, and credit no growth. Growth would depend on Realize winning advertisers or new publisher deals, and neither is secured. Base case: business cash flow of $75 million in the first year and $76 million a year through year ten. It then declines about 3% a year until the Yahoo agreement ends in 2052, reflecting the gradual loss of products and traffic already seen with Explore More. After that it fades to zero over ten years, because nothing we can evidence carries the network beyond its renewing two-to-three-year publisher contracts. The business is worth about $943 million. Bear case: Yahoo and Microsoft together supplied about 34% of 2025 gross advertiser revenue, and the top five publishers about 44%. Large publisher contracts typically run just over two years. The bear case assumes one of the two largest partners is lost or repriced while an advertising downturn like 2022-23 hits at the same time. In that downturn Taboola's operating profit fell about 30% and its owner earnings turned negative. Business cash flow falls from $60 million to about $5 million at the trough, recovers to only $45 million, then fades to zero by year twenty. The business is worth about $360 million. Even at the trough, the company's $133 million of cash covers its small debt. Bull case: cash generation recovers to about $90 million in the first year and $95 million thereafter. This rests on levers already in place: the April cost cuts, stock-based pay falling from $128 million in 2021 to a first-half 2026 rate of about $57 million a year, and the Fox News and other publisher additions running for a full year. It then declines 1.5% a year to 2052 and fades over the following ten years. The business is worth about $1.24 billion. Debt. At June 30, 2026, Taboola had drawn $72 million on its $270 million revolving credit facility, which carries a floating rate and a net-leverage covenant and matures on March 18, 2030. It held $133 million of cash. After setting aside $60 million to run the business, cash and debt roughly cancel, leaving about $1 million of net cash. The company has been shrinking its share count through buybacks ($255 million in 2025 and $64 million in the first half of 2026). We divide by about 291 million diluted shares. What the shares appear to be worth: bear about $1.24 (business $360 million plus $1 million net cash), base about $3.24 ($943 million plus $1 million), bull about $4.25 ($1.24 billion plus $1 million). Margin of safety price: $1.60. Our confidence in the earnings level is only moderate. The business has produced solid owner earnings for just two years, both shaped by the Yahoo ramp. Its revenue depends on a handful of publishers and on advertisers who can leave at a day's notice. It has also just lost a product to a decision by Google. What makes it survivable is the balance sheet: debt is small, cash is ample, and nothing matures before 2030. A downturn would hurt the shares but should not threaten the company. At $1.60 the whole company is priced at about $466 million for a business that, on our base case, produces about $75 million a year after stock pay, roughly a 16% yield. Much of that is spent buying back shares, which raises each remaining share's claim on the business. If the base case holds, buybacks and a move toward base value imply about 20% a year over three to four years. If we are wrong about both the advertising cycle and a major partner, the bear value of about $1.24 is roughly a quarter below that price. A higher price would rely on the base case and leave too little room if Yahoo or Microsoft repriced. The estimate would be too high if Taboola loses Yahoo or Microsoft traffic, if more products depend on Google decisions than we can see, or if Realize fails to win advertisers. It would be too low if 2025's cash generation returns and stock-based pay keeps falling. Shareholder class actions were filed after the August results; no amount has been claimed, so they are not in our numbers.