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Here's the only stock I've purchased during the Nasdaq correction

Here's the only stock I've purchased during the Nasdaq correction

  • 25.03.2025 18:00
  • eu.usatoday.com
  • Keywords: success, success

Investor highlights PubMatic as the sole purchase during Nasdaq's downturn, citing its high-growth potential, strong cash reserves, and attractive valuation despite market volatility.

Alphabet NewsGOOGLsentiment_dissatisfied

Estimated market influence

PubMatic

Positivesentiment_satisfied
Analyst rating: N/A

The article discusses PubMatic's stock purchase and its role in the Nasdaq correction.

Alphabet

Alphabet

Negativesentiment_dissatisfied
Analyst rating: Buy

Alphabet's Google DV361 bidding algorithm changes negatively impacted PubMatic's revenue, causing a dip in its stock price.

Context

Analysis of PubMatic Investment and Market Insights

Market Valuation Concerns

  • S&P 500 Shiller P/E Ratio: Currently at 35.28, significantly above the historical average of 17.22.
  • Historical Precedent: Previous peaks (over 30) have often been followed by significant market declines.

PubMatic Investment Highlights

  • Stock Performance: Dropped due to issues with Alphabet's Google DV360 adjusting its bidding algorithm, affecting revenue in the short term but expected recovery by mid-2025.
  • Growth Drivers:
    • CTV Revenue Growth: More than doubled in Q4 2024 compared to prior year.
    • Mobile and Video Advertising: Strong growth potential as digital advertising expands.
  • Infrastructure Decision: Built proprietary infrastructure for better margins, expected to outpace sales growth in the latter half of the decade.

Financial Strengths

  • Cash Position: $140.6 million in cash, cash equivalents, and marketable securities at end of 2024.
  • Debt-Free: No debt on balance sheet.
  • Valuation Metrics:
    • Forward P/E ratio: 12.7 times, drops to below 9 when considering cash per share.

Competitive Landscape

  • DSP Customers: Alphabet's Google DV360 and The Trade Desk are key partners, with potential risks from algorithm changes.
  • Market Position: Focused on supply side programmatic advertising, competing in a growing digital ad space.

Strategic Considerations

  • Undervaluation: Attractively priced given growth prospects and cash reserves.
  • Long-Term Potential: Expected acceleration in sales growth as CTV becomes a larger revenue source.

Conclusion

PubMatic presents an attractive investment due to its strong fundamentals, growth opportunities in digital advertising, and undervalued stock. However, the broader market remains cautious with high valuations, suggesting selective investments like PubMatic could offer significant returns despite current market conditions.