$150B Ad Industry Crisis: The Stocks to Save It (NASDAQ: MGNI) (NASDAQ: TTD) (OTC US: CMGR) (NASDAQ: CRTO)
February 18, 2021 at 08:23 AM EST
The Advertising industry is in a crisis.
TV commercials are cratering in value, despite the billions spent per year on a product everyone fast-forwards through. Banner PPC internet ads are fast-tracking toward extinction next as we look past them, technologically filter them out, or simply resent them. Product placement is impractical for most products given the connections and capital necessary to influence large-scale production projects.
That leaves few options for brands looking to establish a major reach and a serious splash at launch. The upshot is a $150 billion market in a historic transition, with the proverbial “Next Big Thing” answer lying somewhere in the mix of algorithms and social media influencers.
Where the future goes from here is uncertain, but the market size at stake is enormous and seemingly up for grabs. Something is going to take flight as a new age dawns in this huge market, and it may be tough to understand the picture in real time.
With that in mind, we take a look at a few of the most interesting and potentially disruptive pieces of this emerging puzzle, including: Magnite Inc. (NASDAQ: MGNI), Trade Desk Inc. (NASDAQ: TTD), Clubhouse Media Group Inc. (OTCMKTS: CMGR), and Criteo SA (NASDAQ: CRTO).
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 that it has entered into a definitive agreement to acquire SpotX from RTL Group for $1.17 billion in cash and stock. SpotX is one of the leading platforms shaping CTV and video advertising globally.
“Sellers have been looking for a scaled independent alternative to the giant companies who dominate the CTV marketplace,” said Michael Barrett, President & CEO of Magnite. “The combination of Magnite and SpotX will make this a reality by bringing together the best CTV technologies and teams at a critical time. Ad-supported CTV is just beginning to draw budgets from linear TV and we will be well-positioned to participate in the strongest segment of industry growth for the foreseeable future.”
Shares of the stock have powered higher over the past month, rallying roughly 62% in that time on strong overall action. The stock has roared higher over the past six months, ripping nearly 900% higher in that time.
Magnite Inc. (NASDAQ: MGNI) pulled in sales of $61M in its last reported quarterly financials, representing top line growth of 62%. 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).
Trade Desk Inc. (NASDAQ: TTD) is a cloud-based advertising-buying platform.
Ad buyers can value each impression like traders value stocks, using first and third party data to decide which impression to buy and how much to pay. Its platform enables advertising clients to purchase and manage digital advertising campaigns across various formats, including connected TV (CTV), mobile, video, audio, display, social and native, on a multitude of devices, including smart TVs, computers, and mobile devices.
Trade Desk Inc. (NASDAQ: TTD) most recently announced an in-depth report on over-the-top (OTT) video streaming in the Philippines market, revealing that 36 million consumers stream two billion hours of OTT content per month – making OTT one of the fastest growing media channels in the country.
According to the release, OTT services enable viewers to stream professionally-produced video content over the internet on demand, from any device including smart TVs, personal computers or mobile devices.
The stock has suffered a bit of late, with shares of TTD taking a hit in recent action, down about -2% over the past week.
Trade Desk Inc. (NASDAQ: TTD) generated sales of $216.1M, 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 55.1% on the top line. In addition, the company is battling some balance sheet hurdles, with cash levels struggling to keep up with current liabilities ($557.3M against $1B, respectively).
Clubhouse Media Group Inc. (OTCMKTS: CMGR) is an influencer-based marketing and media firm with a massive and parabolically growing global aggregate social media reach.
The stock has been booming in recent weeks. One narrative to explain that movement is that investors are confused and think they are buying shares of a social app called “Clubhouse” that is preparing to IPO. However, that narrative has been out there for weeks and CMGR has repeatedly publicly made an effort to explain that it has nothing to do with that service.
Clubhouse Media Group Inc.(OTCMKTS: CMGR) shares are booming higher as the company has now amassed potentially as many as 200 million followers among its team of top global influencers.
Most recently, the company signed international superstar singer/songwriter Austin Mahone (multiple chart-topping global hits, nearly 40 million social media followers, and over one billion YouTube views). That follows the company’s deal with Lindsay Brewer (the super-hot superstar supermodel pro racecar driver with millions of social media fans). Which follows its deal with… etc.
If the traditional advertising model is disintegrating, there are a whole bunch of analysts ready to cast their bets on social media, and especially on the influencer model, as a central facet of the next era in the ad space. The day of the Superbowl commercial that launches a new product is over. The day of the viral TikTok post from the hit influencer that gives some love to a newly launched product has arrived.
CMGR may just be the best-positioned and fastest-growing pure-play lion in that thematic jungle. That perspective might explain the stock’s big move higher over the past two months, despite the efforts of some (likely well-meaning) financial media folks who haven’t taken the time to look into the story on more than a cursory level.
The “mistaken identity” narrative was plastered across the internet two weeks ago, surfacing on some of the most widely read financial media platforms in the world.
Clubhouse Media Group Inc. (OTCMKTS: CMGR) shares were under $5 a day later. Now, here we are, two weeks later, and the stock is flirting with $20-30/share. One sympathizes with anyone unfortunate enough to have been panicked out of the stock just above $4/share following those “mistaken identity” articles. One wonders how someone might presume to know why people – complete strangers, never consulted, interviewed, or polled – have invested in a stock.
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.”
And the stock has been acting well over recent days, up something like 27% in that time. Shares of the stock have powered higher over the past month, rallying roughly 62% in that time on strong overall action.
Criteo SA (NASDAQ: CRTO) managed to rope in revenues totaling $476.3M in overall sales during the company’s most recently reported quarterly financial data — a figure that represents a rate of top line growth of -8%, as compared to year-ago data in comparable terms. In addition, the company is battling some balance sheet hurdles, with cash levels struggling to keep up with current liabilities ($626.7M against $668.4M, respectively).
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