Big gains for TubeMogul following low IPO pricing


It looks as if TubeMogul's (NASDAQ:TUBE) IPO underwriters left some money on the table: Shares closed at $11.50, up 64.3% from a $7 IPO price and within the company's original $11-$13 range. They're up another 2.2% AH.

Investor skepticism about video ad tech plays in the wake of Tremor Video and YuMe's weak 2013 IPOs apparently affected TubeMogul's pricing. "We were surprised by the distaste that some investors have for the digital advertising technology sector," says CEO Brett Wilson.

Wilson insists TubeMogul, which offers brands and ad agencies a software platform for planning, running, and monitoring programmatic video ad campaigns, is "just fundamentally different from Tremor and YuMe," and argues the amount of control given to clients by its platform acts as a differentiator. He also notes revenue grew nearly 130% in Q1, albeit off a small base.

Prior TubeMogul coverage.

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Comments (8)
  • Equitable Research
    , contributor
    Comments (2208) | Send Message
     
    Of course CEO Brett Wilson will say that TubeMogul is "fundamentally different" from YuMe (which I am long). TubeMogul is a DSP and YuMe is a DSP, SSP and mobile app monetization platform along with connected TV menu advertising platform.

     

    Problem with TubeMogul is that it has not addressed mobile or multi-screen. It is an entirely web-based desktop solution. When speaking with hedge funds last week, that was a major concern of the TubeMogul IPO Roadshow.

     

    Its nice that the CEO highlights the window dressed Q1 revenue but that will slow without a multi-screen solution as mobile moves to over 50% of video advertising spend by 2018. Will be watching TUBE for a potential short on any move over the $13 initial IPO price target.
    18 Jul 2014, 07:26 PM Reply Like
  • Eric Jhonsa
    , contributor
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    Hey Charles. It looks as if TubeMogul is adopting a strategy similar to LiveRail (just acquired by FB), only they're doing it for the demand side rather than the supply side.

     

    LiveRail's CEO argued their publisher-centric approach set it apart from other video ad tech plays. Wilson seems to be arguing TubeMogul does a better job of catering to brands/agencies than companies that try to appeal to everyone. I'm curious about your thoughts on the viability of that approach.

     

    http://seekingalpha.co...
    19 Jul 2014, 01:46 PM Reply Like
  • Equitable Research
    , contributor
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    Hi Eric. TubeMogul has been around 7 years now and still has no multi-screen platform. The company also loses a lot of money. I'm not sure if it is a viable business. High gross margins, sure, but negative net operating margins doesn't sit well with me at this valuation. Unfortunately I don't know much about LiveRail's finances as they were never made public, so its hard to compare the two companies. I know that TubeMogul is just a DSP, but so is Tremor Video and so is Rocket Fuel and Rubicon Project and dozens of other companies. I'm not sure what TubeMogul has that is very special. I can't even really say that it is a great solution, as it doesn't make money and is unproven. I'm looking to get short on further strength.
    19 Jul 2014, 05:52 PM Reply Like
  • Eric Jhonsa
    , contributor
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    Thanks. I think a lot of tech companies of TUBE's size (Q1 revenue of $22M) and growth trajectory are in the red. TRMR is also in the red, and their growth is a lot slower.

     

    Not sure if I'd call Rubicon a DSP, they also have publisher-facing products and count DSPs such as Rocket Fuel as clients. Either way, the ad tech industry still looks very fragmented, even after recent acquisitions from FB, TWTR, AOL, etc.
    19 Jul 2014, 09:25 PM Reply Like
  • Equitable Research
    , contributor
    Comments (2208) | Send Message
     
    True, Rubicon Project is a hybrid DSP and SSP.
    19 Jul 2014, 09:42 PM Reply Like
  • Equitable Research
    , contributor
    Comments (2208) | Send Message
     
    Just to clarify my position on TRMR, since you mentioned it, I wouldn't buy it. Although it looks alot more attractive now in the $3s, but I made a big bet on YUME and all things considered it is my sector (and major market ) pick. Remember YUME makes money and analysts expect $10M net profit next year. It is a totally differentiated business with a niche focus moving TV dollars to online video and it has the best technology, although most people haven't realized that yet. I try not to get wrapped up in things like gross margins which seemingly make TUBE attractive knowing that alone coupled with losses that metric is meaningless. TUBE has been around for 7 years, nearly as lomg as YUME, and has no profit in sight or a multi-screen solution. To me those are the two big risks of a TUBE investment and as the value rises of the shares, I must get short because it will likely follow the same path RUBI and FUEL took once smart people realized those companies were simply hype.
    20 Jul 2014, 10:26 AM Reply Like
  • M Cuturic
    , contributor
    Comments (393) | Send Message
     
    Charles,
    So is CEO Wilson flat out deceiving TUBE investors with the below comment or is there truth to the differentiation he is point out(YuMe and Tremor)?

     

    Wilson insists TubeMogul, which offers brands and ad agencies a software platform for planning, running, and monitoring programmatic video ad campaigns, is "just fundamentally different from Tremor and YuMe," and argues the amount of control given to clients by its platform acts as a differentiator. He also notes revenue grew nearly 130% in Q1, albeit off a small base.
    19 Jul 2014, 12:12 PM Reply Like
  • Equitable Research
    , contributor
    Comments (2208) | Send Message
     
    There is alot of differentiation between TUBE and YUME as I posted above some of the differences. TUBE is more like TRMR, both web-based DSPs. TUBE has better technology however than TRMR though, but its same sort of business concept.
    19 Jul 2014, 05:37 PM Reply Like
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