What Happened?
Shares of digital advertising technology company PubMatic (NASDAQ: PUBM) jumped 5.2% in the pre-market session after peer ad tech company JOYY reported strong second-quarter financial results, boosting sentiment across the sector.
JOYY announced that its non-livestreaming revenue, which includes its ad tech business, grew 25.6% year-over-year. This positive report suggests underlying strength in the digital advertising market, likely providing a lift to PubMatic's shares as the stock recovers from a recent downturn.
Earlier in the month, PubMatic's stock fell over 21% after it disclosed that a top demand-side platform (DSP) partner had reduced its ad spending due to a platform shift. That negative news also prompted the announcement of a securities fraud lawsuit against the company.
After the initial pop the shares cooled down to $8.39, up 0.6% from previous close.
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What Is The Market Telling Us
PubMatic’s shares are very volatile and have had 25 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 6 days ago when the stock gained 3.3% on the news that Rosenblatt initiated coverage on the stock with a 'Buy' rating and a $17.00 price target.
The price target suggests significant potential upside from the stock's recent price. In its note, Rosenblatt cited PubMatic's position as the third-largest supply-side platform (SSP) and noted the potential for the stock to more than double. The firm's bullish thesis is primarily driven by the expected remedies from Google's AdTech antitrust case, which Rosenblatt believes are likely to materialize in 2026, creating 'lots of conservatism arguing for even more upside potential.' Despite recent operational challenges, including a reduction in ad spending from a top partner that caused the stock to fall significantly on August 12, Rosenblatt views PubMatic as a 'meaningful and capable AdTech player.'.
PubMatic is down 43.5% since the beginning of the year, and at $8.39 per share, it is trading 51.1% below its 52-week high of $17.14 from February 2025. Investors who bought $1,000 worth of PubMatic’s shares at the IPO in December 2020 would now be looking at an investment worth $284.75.
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