If there are investors looking for some excitement in ad tech, they really need look no further than TubeMogul Inc. (TUBE) .
Over the last week alone, the digital advertising company's shares fell more than 14% on Monday, rose almost 13% on Tuesday, then fall more than 7% on Wednesday. TubeMogul shares fell another 2.1% on Thursday, closing at $11.61.
In between all of that fluctuation, TubeMogul, which is based in Emeryville, Calif., posted a better-than-expected earnings report and was also hit with a rating downgrade from analyst Daniel Salmon at BMO Capital Markets.
And if all that weren't enough to test someone's nerves, TubeMogul's shares are also down about 47% since the start of the year.
What makes TubeMogul such a wild ride is no secret. The company specializes in programmatic advertising, a technology that automates the buying, placement and targeting of ads online and TV. The technology uses information gleaned from visits to websites and other data to target ads to consumers at a particular time and context.
TubeMogul is considered one the leaders among independent ad technology companies. But some analysts say the company is suffering from a perception that its business model is threatened by the likes of Google Inc.(GOOGL) - Get Report, Facebook Inc.(FB) - Get Report and Twitter Inc.(TWTR) - Get Report and the data those giants get from their millions of users.
"The [stock price] fluctuations are probably less a reflection of company-specific details and more of a general uncertainty of the [ad tech] ecosystem," said Todd Van Fleet, an analyst with First Analysis Securities. "When you have such large players taking up such large pieces of the market, you get questions about traditional factors like pricing and how companies are positioned."
When he cut his rating on TubeMogul to market perform, BMO's Salmon cited the company's position against not Google or Facebook, but privately held Appnexus as one of his reasons for having concerns about TubeMogul as an investment. Appnexus's entrance into the video-buying market and the value of ads it serves provide some challenges to TubeMogul.
"We fully expect TubeMogul to continue innovating and succeeding," Salmon said in a research note. "But at the margin this leads up to a more cautious view."
Yet with its second-quarter results posted Monday, TubeMogul CEO Brett Wilson makes a case that his company is holding its own in the programmatic ad market.
For the quarter ended June 30, TubeMogul reported a second-quarter loss of $1.3 million, or 4 cents a share, on $45.4 million in revenue, compared with a profit of $2.1 million, or a penny a share, on sales of $28.7 million a year ago. While TubeMogul swung to a quarter loss, its results topped the estimates of Wall Street analysts, who had forecast the company to lose 9 cents a share on revenue of $39 million. TubeMogul also said its "total spend," a measure of ad buying on its platform, reached $105 million, a 72% increase from a year ago.
"They create a very attractive software that [ad] agencies love to use to place their video buys," Van Fleet said. "It's a complicated space, and the technologies are continually evolving so it can be easy to take a negative tone or view with so many fast moving parts."
This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.