The Mirriad Advertising (LSE:MIRI) share price recently surged following the announced collaboration with Microsoft. Together they are building a new API to enable Mirriad’s advertising technology for “dynamic insertions by media partners”. This is an important milestone for the ad company and the continued development of its in-content advertising platform, proposition, and business.

The share price of the ad company went as high as 63p in 2021. But today, it’s sitting at just 2.8p! What happened? And can the Mirriad Advertising share price recover in the long run?

Key points

• The collaboration announcement gave a huge boost to Mirriad Advertising’s share price.
• The company has 35 patents to date.
• Analysts have predicted a whopping potential 1,438% increase in price in the next 12 months.

What does Mirriad Advertising do?

Mirriad Advertising is a UK-based company that provides in-video advertising solutions. Its patented AI and computer vision technology dynamically insert products and innovative signage formats into content after it’s produced. It seems this novel approach has granted the firm a unique first-mover advantage in the marketing arena. And this edge is currently being protected by a portfolio of 35 patents.

Despite being a tiny company with a market cap of £13.6m, the company has received much recognition in the form of awards. The most recent one was the “Digiday Technology Award”.

The bull case for the Mirriad Advertising share price

Mirriad developed a platform to give its customers live, on-screen visibility of the content’s audience, demographic, and geographic reach potential. This has proven to be a huge advantage and one of the key growth drivers of business.

During this period, Mirriad Advertising enjoyed a bullish run from the year 2020 to 2021. From a price of 6.24p, the stock went as high as 63p.

On the other hand, they also have a competitive advantage in the overall industry. None of the competitors is yet at or near the level of technical achievement or commercialisation achieved by this organisation. Whereas Mirriad is running campaigns with credible content and brand partners.

The bear case for the Mirriad Advertising share price

Unfortunately, the Mirriad Advertising share price has been on a bearish trend for the past two years. Ever since the stock hit the peak of 63p in April 2021, its market capitalisation has been steadily declining. And to date, the stock has lost more than 95% of its share value.

Seeing some pullback after hitting an all-time high isn’t surprising, especially for a penny stock. However, this sustained decline is certainly a bit extreme. What happened? It seems investors are getting understandably impatient. Revenues have been dropping, while losses rising. And the high cash burnout is only adding more pressure preventing management from allocating a robust research & development budget, particularly in its customer-services-oriented applications.

Needless to say, if this situation doesn’t improve, the novelty of its technology will quickly wear off. And the path to industry dominance will likely never materialise.

Mirriad Advertising share price prediction

The non-stop bear trend of Mirriad Advertising’s share price has resulted in huge losses for many investors. However, the table seems to be turning now. With the focus on new projects and collaborations, I believe Mirriad is running on an accelerated growth path.

There’s only one institutional analyst following this business. But their forecast certainly suggests they are optimistic about the future with a price target of 45p. That’s roughly a 1,440% rise from today’s valuation.

It’s important to stress that this prediction must be taken with a pinch of salt. A lot of hurdles still need to be overcome, and in the meantime, there will undoubtedly be countless external threats bearing down on this firm. In other words, this price forecast appears to be the best-case scenario which is never guaranteed to happen.

Should I buy Mirriad Advertising shares today?

The Mirriad Advertising share price is on its path to recovery, in my opinion. The ad company has proven itself in the past with its work when it led the in-content ad platform along with the patented platform. Also, they have been continuing inroads into North America, which is the world’s largest advertising market.

This, coupled with the analysts’ remarkable price prediction, has given me enough confidence to consider adding a small speculative position in Mirriad Advertising to my personal portfolio.

Saima Naveed does not own shares in any of the companies mentioned. The Money Cog has no position in any of the companies mentioned. Views expressed on the companies and assets mentioned in this article are those of the writer and, therefore, may differ from the opinions of analysts in The Money Cog Premium services.