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Digital Turbine, Trade Desk, AppLovin: 3 Adtech Stocks to Consider

Marketers and publishers are increasingly looking to adtech to manage their digital campaigns. Here are three key stocks in the sector.

The advertising industry has been transformed over the past couple of decades. Channels like search engines, social-media networks, and smartphones have created entirely new opportunities for marketers to reach their target audiences.

In that effort, many classic marketing channels -- radio, magazines and billboards -- have been sidelined or rendered obsolete.

The new tech-centric methods leverage massive amounts of data to help companies target specific demographics and make the most of every dollar they spend on ads.

Marketers and publishers are increasingly looking to advertising-technology  companies to set up and manage their digital campaigns. As the pandemic has eased, the secular growth trend of digital advertising has only accelerated.

This in turn has created opportunities for investors, particularly since the adtech-software market is expected to grow at a compounded annual rate of 7.9% from 2019 to 2026, according to Verified Market Research.

Here are three adtech companies investors would do well to assess:

Digital Turbine  (APPS) - Get Digital Turbine, Inc. Report

Did you know that more than 85% of Americans own smartphones? This statistic shows the potential of adtech companies that can help advertisers monetize mobile content.

That’s a big reason Digital Turbine should be on investors’ radar. The Austin company provides an end-to-end solution for mobile technology companies that want to enable advertising and monetization solutions.

Per the company’s investor presentation, the global mobile advertising market is estimated to grow nearly 60% to more than $540 billion in 2025 from $340 billion in 2021.

When you consider how smartphone usage can grow in developing countries, it’s easy to recognize the upside potential here.

The average consumer has more than 30 apps on his or her device and uses roughly 10 of them each day. That gives Digital Turbine plenty of opportunities to help out with things like discovering brands, acquiring users, and monetizing.

Digital Turbine’s adtech platform can add value to mobile carriers, original equipment manufacturers of devices, app publishers, and developers.

The company’s recent growth reflects the opportunity. For fiscal 2021 the company more than tripled adjusted earnings per share, while more than doubling (up 126%) revenue to $313.6 million.

Trade Desk  (TTD) - Get Trade Desk, Inc. Class A Report

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Programmatic advertising -- a way to automatically buy and optimize digital campaigns instead of purchasing them directly from publishers -- is another important development in the marketing world.

Many advertisers are looking to buy ad space on the internet, and publishers have websites and other platforms with digital-ad space for sale.

Trade Desk has developed a platform that helps buyers create, manage and optimize data-driven digital-advertising campaigns in a variety of formats.

Advertising on display, video, audio, native, social networks, computers, mobile devices, and connected TVs has become a huge area of focus for marketers, and this company is making it more profitable, more effective, and less costly.

Put simply - data are gold in the advertising industry, and Trade Desk has access to huge amounts to help ad agencies optimize their campaigns.

The company’s Q2 revenue more than doubled year-over-year, reflecting the bounceback in digital-ad outlays as the pandemic eased. 

And investors have good reason to be optimistic about its growth as programmatic advertising continues to catch on domestically and internationally.

Another reason to consider the stock: Trade Desk is partnering with Walmart  (WMT) - Get Walmart Inc. Report to launch a demand-side platform at the end of October.

Finally, Trade Desk recently split its stock 10 for 1 and could be in for a strong finish to the year.

AppLovin  (APP) - Get AppLovin Corp. Class A Report

Continuing with the theme of companies that can help with mobile-app monetization, AppLovin is a recently public company investors interested in adtech should consider.

The stock is closing in on its post-IPO highs and is currently rallying on news that it will acquire mobile-advertising network MoPub from Twitter  (TWTR) - Get Twitter, Inc. Report for $1.05 billion.

This acquisition makes sense for AppLovin, which develops software solutions to help mobile-app developers grow their businesses.

The company’s solutions include AppDiscovery, a marketing software solution; MAX, an in-app bidding software that optimizes the value of an app’s advertising inventory; and Compass, an analytics software tool to help developers optimize their apps' ad performance.

A few months ago AppLovin reported second-quarter results, including a doubling (up 123%) of revenue to $669 million. Revenue excluding acquisitions rose 97% year over year. 

It wouldn’t be surprising to see this stock cross $100 in coming weeks, especially if we continue to see strength in growth stocks. So keep an eye out for the break of the $90.03 post-IPO high.