Wall Street Mostly Hates Adtech IPOs
The past few years have not been particularly kind to advertising technology companies who've tried their luck on the stock market.
Despite big revenues and huge promise, most of the companies in the recent wave of ad tech IPOs have either failed miserably out of the gate, or have just now turned themselves around after a sharp drop early in their lives as public companies.
In some cases, like Millennial Media, these companies have been punished by Wall Street for failing to produce profits even as they've increased the scale of their advertising networks. Others, like the now-bankrupt Velti, relied on clients whose financial troubles meant they simply couldn't afford to pay them anymore.
And yet, recent success from buy-side ad network Rocket Fuel and the ad targeting company Criteo give the industry hope for the future.
Here's a look at some recent ad tech IPOs and how they've fared since:
Mobile advertising exchange Millennial Media is the poster child for Wall Street's frustration with ad tech companies who are large in scale, but haven't figured out how to turn a profit. Despite building one of the five biggest mobile advertising businesses in the world, Millennial's stock has fallen from its debut at $25 in the Spring of 2012 to around the $6 mark. MM has attempted to become profitable by increasing its scale with the acquisition of rival Jumptap, but investments in sales staff and increased payments to developers have pumped up the company's operating costs, causing it to report a net loss of $4.6 million this past quarter.
Ah, Velti. The mobile exchange was once the envy of the ad tech world, with more than 1,000 employees, and a giant spaceship office in San Francisco. Alas, the company was doomed by a series of ill-fated acquisitions and its inability to get its hands on the money it was owed by customers in the collapsing economies of Greece and Cyprus. Velti filed for bankruptcy protection earlier this month and intends to sell its U.S., British, and Indian mobile marketing businesses to Blackstone Group.
Tremor Video was initially priced at a lower than expected $10, and things have only gotten worse from there for the video ad network. Unfortunately for the video ad tech market, Tremor Video was the first company from the sector out of the gate, and its failure is thought to be holding back other video ad tech companies that might want to go public.
Bogged down by insiders who already owned 84% of its stock before it went public, the video ad network YuMe debuted around $9 in August and has hovered around that mark ever since.
Rocket Fuel is a demand-side platform that uses artificial intelligence that helps advertisers determine which online ad slots to buy and how much to pay for them. The company came out of the gate strong by closing its first day of trading at $56.10, a 93% increase from its initial pricing. After a sharp decline to $37 in October and early November, Rocket Fuel climbed back up to over $50 upon news that it increased revenues by 132% year over year. It's since dropped to around $48.
The retargeting company Criteo has had the smoothest sailing of the bunch thus far, taking in $250 million from its IPO and popping from its initial price of $31 on its first day of trading last month. It's now sitting pretty at a respectable $33.30, but it remains to be seen how the company will fare with the much-rumored death of the cookie, a critical part of Criteo's business.
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