Digital advertising technology (AdTech) platform Pubmatic (NASDAQ: PUBM) stock had pulled back over 30% off it’s 2021 highs as shares undergo a repricing. The AdTech segment was a strong pandemic benefactor gaining from the amplified digital and cloud migration accelerated by COVID-19 restrictions. As COVID vaccinations accelerate, the epicenter and brick and mortar reopening plays are seeing a rotation of money flowing in while pandemic winners feel the money flowing out. Industry leader The Trade Desk (NASDAQ: TTD) shares are the tier 1 price indicator and competitor Magnite (NASDAQ: MGNI) rounds out price action and sentiment indicators. The recent sell-off in Pubmatic shares can provide opportunistic pullback levels for prudent investors seeking exposure in this high-margin growth segment.
It’s propriety social marketing platform simplifies media buying for marketers and advertisers across all the major social media platforms including Facebook Instagram (NYSE: FB), Twitter (NYSE: TWTR), Snapchat (NYSE: SNAP) and Pinterest (NYSE: PINS). Business has been thriving as the Company raised its guidance three times. The Company has been growing both organically and through acquisitions which prompted secondary offerings to fuel to the strategy. Shares have nearly doubled since the start of 2021. Prudent investors seeking exposure can watch for opportunistic pullback levels.
Q4 FY 2020 Earnings Release
On Feb.23, 2021, Pubmatic released its fiscal fourth-quarter 2020 results for the quarter ending December 2020. The Company reported an earnings-per-share (EPS) profits of $0.34 beating analyst estimates by $0.32 by $0.02. Revenues rose 63.4% year-over-year (YoY) to $56.2 million, beating analyst estimates for $47.57 million. Full-year 2020 revenues grew 31% YoY to $148.7 million. Net incomes was $26.6 million or $0.46 per-share versus $6.6 million or $0.04 per-share. Full-year 2020 Adjusted EBITDA rose 122% YoY to $50.3 million versus $23.3 million in 2019. The Company closed the year with cash and cash equivalents of $101 million. Pubmatic CEO, Rajeev Goel stated, “We are in the midst of 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.”
Raised Guidance Estimates
Pubmatic raised its guidance for Q1 2021 revenues to come in between $38 million to $40 million beating consensus analyst estimates for $33.9 million. The Company expects Q1 2021 Adjusted EBITDA in a range between $8 million to $9 million or 21% to 23% margin. For the full-year 2021, the Company expects revenues between $180 million to $185 million versus consensus analyst estimates for $168.78 million. Full year Adjusted EDITDA range is expected between $45 million to $49 million or 25% to 27% margin.
Conference Call Takeaways
Perion CEO, Rajeev Goel set the tone, “If I were to summarize the state of our business today, we are benefitting from having multiple growth drivers in place and executing well against that… Pubmatic provides critical infrastructure in the form of a specialized cloud platform, that enables real-time programmatic advertising transactions between publishers and the media buying community… Mobile, digital video, and over-the-top streaming to connected TV devices represented 65% if our revenue in the fourth quarter as we drive upsell and cross-sell initiatives across our holistic platform.” CEO Goel detailed how short-form video, OTT and CTV experienced 100% YoY growth in Q4. He elaborated, “All advertising will become digital and all digital advertising will become programmatic, which simply means applying automation and data. Programmatic advertising creates better outcomes for consumers, publishers and advertisers.” Goel summed it up, “Our core focus is on publishers, which is where our name Pubmatic comes from, the combination of publisher and automatic… In addition to providing publishers with our header bidding expertise and technology platform, we increase their revenue by bringing additional data to each ad impression and incremental advertiser demand.”
PUBM Opportunistic Pullback Levels
Using the rifle charts on the weekly and daily time frames provides a precision near-term view of the playing field for PUBM shares. The weekly rifle charts are still materializing but the 5-period moving average (MA) has gone flat near the $52.95 Fibonacci (fib) level. The weekly stochastic, 15-period MA and Bollinger Bands are still in the development stage requiring more weekly candle closes. The daily rifle chart formed a bearish inverse pup breakdown with a falling 5-period MA at $50.46 as the weekly stochastic cross back down towards the 20-band. Th 15-period MA sits at the $56.97. The daily market structure low (MSL) buy triggers above the $56.97 but the opposing weekly market structure high (MSH) sell triggered under $64.06. The daily inverse pup breakdown presents opportunistic pullback levels at the $44.01 fib, $41.55 fib, $39.39 fib, $37.55 fib, and the $35.76 fib. The upside trajectories range from the $56.97 daily MSL trigger up to the $74.79 fib. Keep an eye Magnite (NASDAQ: MGNI) and The Trade Desk (NASDAQ: TTD) as sympathy stocks that move together.
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