Snap Cratering Creates an Opportunity to Buy Another Bargain Tech Stock
Snap (NYSE: SNAP) reported its second-quarter earnings on July 21, and the results were not good. Q2 revenue grew just 13% year over year, which was underwhelming even compared to the company's revised guidance of sub-20% revenue expansion. Snap cited decreasing demand for advertising space on its platform due to macroeconomic challenges and platform policy changes from Apple.
Investors took this disappointing result and assumed that the rest of the advertising industry would report facing similar difficulties.Many advertising technology (adtech) companies were sold off as a result. PubMatic (NASDAQ: PUBM) was such adtech company, falling almost 10% after Snap reported earnings. But investors might be throwing the baby out with the bathwater. Not all adtech companies are facing the same issues as Snap, which means that some players could thrive, even in an unfriendly environment. Here's why PubMatic could be one of those that soars higher.
Snap's first problem was Apple's Identifier for Advertisers (IDFA) changes, which made it harder for companies to gather data on their consumers, and consequently decreased ad effectiveness. PubMatic helps publishers find ad buyers to fill their inventory, so theoretically, it could also be hurt by this change. However, PubMatic serves publishers across a wide array of ad channels -- not just mobile apps. This gives the company more revenue diversification, minimizing the impact of Apple's changes for PubMatic. In the fourth quarter of 2021, PubMatic's CFO Steve Pantelick reiterated this, saying that the company remained relatively unscathed by Apple's update "as advertisers shifted ad dollars to other high ROI formats and channels on our platform."
Source Fool.com