PubMatic is a small-cap growth stock in the fairly fast-growing adtech sector, which could get further tailwinds from reopening and trends like CTV.
Its valuation is lower than other companies in this space, such as The Trade Desk, while growing faster.
Pubmatic acts as a so-called sell side platform in this regard - in comparison, The Trade Desk is a pure buy side platform. Put simply, the buyers are those who buy advertising inventory, while the sellers are those who offer advertising space, anywhere on the Internet. So the thesis is that PubMatic (both as a company and as a stock) could become on the sell side what The Trade Desk has become on the buy side.
The company is founder-led and has grown organically unlike Magnite (its biggest competitor). What is impressive here is that the company is profitable while growing strongly and is reasonably valued.
PubMatic has projected growth of 33% for the year. Net retention was 130% in the first quarter, and growth in mobile and video also grew much faster than the overall business.
Risks are the large number of competitors, as well as the economic vulnerability of the AdTech industry.
