Investing in Emerging Ad Tech Opportunities (PUBM, CRTO, CMGR, MGNI)

The Ad industry is rapidly evolving before our eyes. But evolution is nothing new to this space. It has always been in a constant state of change as mediums and technology and audiences change, along with culture, more broadly.

However, one thing has remained the same all along: the goal is to target audiences with relevant messaging, products, and services.

Because of that prime directive, the internet is a superior medium to television or print media because there is more user data and more can be inferred from context and choice architecture. With a greater understanding of the audience comes a greater ability to deliver precisely targeted ads.

As internet advertising finally and forever overtakes ad spend on old-school media, we are seeing a range of disruptive new ideas appear, including programmatic AI, social media influencer models done at scale, and other powerful innovations – which ultimately means potential opportunities for investors.

With that in mind, we take a look at some of the more interesting opportunities beginning to emerge as next-gen solutions set to define the ad-tech space ahead, including: PubMatic Inc (NASDAQ:PUBM), Criteo SA (NASDAQ:CRTO), Clubhouse Media Group Inc (OTCMKTS:CMGR), and Magnite Inc (NASDAQ:MGNI).

PubMatic Inc (NASDAQ:PUBM) bills itself as a company that delivers superior revenue to publishers by being an SSP of choice for agencies and advertisers.

The company claims that its cloud infrastructure platform for digital advertising empowers app developers and publishers to increase monetization while enabling media buyers to drive return on investment by reaching and engaging their target audiences in brand-safe, premium environments across ad formats and devices.

PubMatic Inc (NASDAQ:PUBM) most recently reported its Q4 financial results, including revenues of $56.2 million, an increase of 64% over $34.4 million in the same period of 2019, and net income of $18.8 million, or $0.34 per diluted share in the fourth quarter, an increase over net income of $4.1 million, or $0.06 per diluted share in the same period of 2019.

“Our record performance demonstrates PubMatic’s differentiated market position across the digital advertising ecosystem,” said Rajeev Goel, co-founder and CEO at PubMatic. “We are in the midst of an accelerated digital transformation, with consumers everywhere spending more time online as they shift transactions from the physical world to the Internet. PubMatic brings the global infrastructure and scale that publishers need to power data-intensive, real time programmatic ad transactions in order to increase their revenues. We are executing well and growing organically in mobile, digital video, and over the top streaming and connected TV (OTT/CTV). Our buyer supply path optimization relationships are expanding, and we are gaining market share in the large and growing global digital advertising market.”

PubMatic Inc (NASDAQ:PUBM) has had a rough past week of trading action, with shares sinking something like -4% in that time. That said, chart support is nearby, and we may be in the process of constructing a nice setup for some movement back the other way. Shares of the stock have powered higher over the past month, rallying roughly 27% in that time on strong overall action.

Criteo SA (NASDAQ:CRTO) trumpets itself as “the global technology company powering the world’s marketers with trusted and impactful advertising.”

According to company materials, 2,600 Criteo team members partner with over 21,000 customers and thousands of publishers around the globe to deliver effective advertising across all channels, by applying advanced machine learning to unparalleled data sets. Criteo empowers companies of all sizes with the technology they need to better know and serve their customers.

Criteo SA (NASDAQ:CRTO) most recently announced financial results for the fourth quarter and fiscal year ended December 31, 2020 that exceeded the top end of its most recent quarterly guidance.

Megan Clarken, Chief Executive Officer of Criteo, said, “I am proud of how much we achieved in 2020. We made multiple structural changes across the company that we believe have set Criteo up for sustainable profitable growth and led to significant over-performance of guidance during Q4. We believe that our transformation into a Commerce Media Platform, building on our unique Commerce data and Reach assets and purpose-built marketing and monetization capabilities, positions us for durable growth and long-term shareholder value.”

Even in light of this news, CRTO hasn’t really done much of anything over the past week, with shares logging no net movement over that period.

Criteo SA (NASDAQ:CRTO) generated sales of $662.8M, according to information released in the company’s most recent quarterly financial report. That adds up to a sequential quarter-over-quarter growth rate of 39.1% on the top line. In addition, the company is battling some balance sheet hurdles, with cash levels struggling to keep up with current liabilities ($488M against $600.3M, respectively).

Clubhouse Media Group Inc (OTCMKTS:CMGR) is a pure-play social media influencer-based marketing solution that leverages a massive reach and strong proprietary technology to provide brands with access to expanded visibility and targeted marketing in the social media influencer space.

This is an active commercial entity in the marketing and ad-tech space with a vast and rapidly growing reach that has already blown past 100 million followers in aggregate among its signed influencers. The company has already signed a number of major global brands in client marketing deals, acquired market-leading AI ad technology, increased its reach through A-list celebrity influencer additions, and expanded into new markets, including the massive Las Vegas marketplace.

Clubhouse Media Group Inc (OTCMKTS:CMGR) recently announced that it has signed a non-binding Letter of Intent to acquire “The Tinder Blog”, one of the largest and most successful Instagram meme accounts in the world. The Tinder Blog is also an official partner of Facebook, according to information from the company.

This would be huge because it would not only represent a high-growth, high-margin pursuit, but also one that is adjacent to the company’s current strategic exposure, diversifying its investment profile within its zone of expertise.

As noted in the release, The Tinder Blog boasts over 4.2 million followers accrued over its six-year existence and an annual net income in excess of one million dollars on more than one billion web impressions per month. The Tinder Blog has also attracted major advertisers, including McDonald’s, Amazon Prime, Dunkin Donuts, and Samsung, among others. The Tinder Blog was founded and cultivated by Joseph Yomtoubian, a Los Angeles native, MBA, and finance consultant who launched the page in 2015.

“This is a significant deal for Clubhouse because we have been actively looking to expand our reach beyond traditional influencers to incorporate and reach more channels, niches, and outlets in the social media landscape,” commented Chris Young, Co-Founder of Clubhouse Media Group. “Joseph is a wealth of knowledge that can’t be taught. He is widely regarded as a leading Instagram and social media expert. We feel The Tinder Blog is an ideal match that offers tremendous complementarity within the constellation of our current social media reach and Intellectual Property portfolio. The Tinder Blog’s evergreen content creates a natural long-tail business. Combined with hyper-loyal fandom, these aggregator accounts make for highly sustainable and scalable businesses that complement our mission and portfolio.”

Clubhouse Media Group Inc (OTCMKTS:CMGR) shares have been red hot. While analysts and financial media journalists have been casting about for an explanation without doing real research, investors have been locking onto the company’s potential for market leadership in an interesting emerging niche.

Magnite Inc (NASDAQ:MGNI) bills itself as the world’s largest independent sell-side advertising platform. According to the company, publishers use its technology to monetize their content across all screens and formats – including desktop, mobile, audio, and CTV.

Company materials go on to note that the world’s leading agencies and brands apparently trust its platform to access brand-safe high-quality ad inventory and to execute billions of advertising transactions each month.

Magnite Inc (NASDAQ:MGNI) most recently announced the release of its “CTV: The Future Forward” report. The study of 10,500 consumers across the UK, France, Germany, Spain, and Italy, identifies how audiences are consuming TV and explores the opportunity for marketers seeking to connect with engaged audiences as the shift to CTV accelerates and consumer behavior evolves.

According to the release, the results of the study show that there is widespread adoption of CTV streaming platforms across the EU5. Overall, 82% of EU5 respondents tune into CTV weekly. The UK leads in this metric, with nearly nine in ten (89%) of UK respondents reporting that they used a streaming service at least once a week and 61% watched daily. Additionally, 71% of EU5 viewers said they preferred streaming over broadcast TV.

While this is a clear factor, it has been incorporated into a trading tape characterized by a pretty dominant offer, which hasn’t been the type of action MGNI shareholders really want to see. In total, over the past five days, shares of the stock have dropped by roughly -22% on above average trading volume. All in all, not a particularly friendly tape, but one that may ultimately present some new opportunities. Shares of the stock have powered higher over the past month, rallying roughly 10% in that time on strong overall action. Magnite Inc (NASDAQ:MGNI) pulled in sales of $61M in its last reported quarterly financials, representing top line growth of -25.6%. In addition, the company is battling some balance sheet hurdles, with cash levels struggling to keep up with current liabilities ($104.4M against $473.6M, respectively).

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