Rocket Fuel Inc.

Thesis

FUEL is overvalued at 5.9x 2014E revenue compared to the industry average of 2.2x, with no earnings or positive cash flow expected until 2016. The company faces significant competition and margin compression due to commoditization in the DSP market, leading to an unsustainable business model. A lock-up expiry on 3/19/14 is expected to create selling pressure, making it a strong short opportunity.

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