What Happened?
Shares of insurance customer acquisition platform MediaAlpha (NYSE:MAX) jumped 3.4% in the afternoon session after the ISM Services PMI Report showed the business services sector continued to expand in June.
The Institute for Supply Management (ISM) reported that its Services PMI registered 54 percent. While this is a slight decrease of 0.5 percentage point from May's reading of 54.5 percent, it marks the 24th consecutive month of growth for the sector. A PMI reading above 50 percent indicates that the services sector economy is generally expanding. The sustained period of expansion suggests a resilient economic backdrop for service-oriented companies, signaling healthy business activity and demand.
The shares were trading at $13.97, up 4.1% from the previous close.
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What Is The Market Telling Us
MediaAlpha’s shares are very volatile and have had 26 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 21 days ago when the stock gained 3% on the news that yields tumbled as the Trump Administration announced a new peace deal that would lead to the reopening of the Strait of Hormuz.
Staffing firms, management consultants, technology outsourcing providers, and enterprise services companies earn revenue when clients commit to projects. That commitment requires two things: a stable macro outlook and manageable borrowing costs. The 10-year Treasury yield fell to its lowest level since mid-May as inflation fears eased. The sector had been a quiet underperformer as CFOs deferred discretionary spending in favor of waiting for clarity. That wait appears to be ending. Business services companies whose revenue is tied to enterprise activity rather than consumer spending tend to see bookings recover earlier than broader economic data suggests.
MediaAlpha is up 16.9% since the beginning of the year, and at $13.97 per share, it has set a new 52-week high. Despite the year-to-date gain, investors who bought $1,000 worth of MediaAlpha’s shares 5 years ago would now be looking at only $357.30.
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