QuinStreet Inc (NASDAQ:QNST) recent spike of 200% in shares is being considered dubious by trade analysts. The company is said to be operating in the domain of performance marketing and claims to be the Web 1.0 lead-gen firm. Analysts believe that the spike in the shares is mostly because of certain dubious methods adopted by QNST and its partners.
The evaluation is based on the study of numerous lawsuits, testimonies from employees and customers and independent analysis that suggest egregious ACPA (cyber-squatting) and TCPA violations, non-credited leads, selling recycled or low-quality leads and more. The report says that these methods used by QNST are wholly unsustainable just similar to Bankrate who recently partnered through All Web Leads (AWL) with QNST.
The analysis says that decline in traffic, weakness in internal controls and new FCC rules have forced QNST to take drastic measures including implementation of malware-driven traffic. FCC, customer concentration, and Google reliance are underappreciated risks. In the past six months, FCC has issued TCPA fines of 9-figure.
QNST Second-Quarter Results Report 33% Increase
The company claims to provide “qualified” leads through search engines; email campaigns, company-owned websites, and partnerships and then these are sold to advertisers on a per-click or per-lead basis. The company has managed to generate historically most of its revenue from the education field such as for-profit colleges.
With the for-profit education industry significance declining, QNST is now facing a precarious condition. However, the second quarter report from the company reveals revenue of $87.5 million, which is 33% year-over-year increase. The report also says that GAAP net income for the company is $1.9 million which amounts to $0.04 per share.
QNST leads the performance marketing products and technologies. The company announced its financial results for the second fiscal quarter recently that ended on December 31, 2017. The report says that the adjusted net income for this particular quarter was $3.7 million amounting to $0.07 per share. The adjusted EBITDA was $6.6 million amounting to 8% of revenue.