Shares of The Rubicon Project (NASDAQ:MGNI) flew higher on Wednesday, and quite unexpectedly as the company didn't report any news. Even still, the stock was a whopping 16% higher at 3:15 p.m. EDT.
However, advertising-technology company Criteo did have news today. While it's a different business, the positive trends it's noticing could equally benefit other ad-tech companies like The Rubicon Project and The Trade Desk.
When Criteo reported earnings at the end of April, it also issued guidance for its upcoming second quarter. Its guidance assumed the COVID-19 pandemic would negatively effect its revenue, resulting in a continued revenue decline from April through May. However, spending in May didn't fall. The exact numbers weren't given -- the company only said results were "better than expected." That caused this stock to soar today, as well.
This is potentially good news for The Rubicon Project. When it reported earnings for the first quarter of 2020, it noted business was down approximately 30% in April. Therefore, its guidance reflected that downward trend. It expects second-quarter revenue of $36 million to $39 million, which is a 27% quarter-over-quarter drop at the midpoint. The stock fell hard as a result.
The Trade Desk also saw declines in advertising revenue in late March and April but declined to give revenue guidance going forward. However, if the trends observed by Criteo extend to the entire advertising ecosystem, it would be welcome news for The Trade Desk and The Rubicon Project. And that's why their stocks are rising today.
Shareholders are undoubtedly happy The Rubicon Project stock is soaring today. But this stock is still volatile due to coronavirus uncertainty. As either positive or negative news breaks in the weeks and months ahead, this small-cap stock will likely behave like a yo-yo.
Rather than predicting the daily ups and downs, it's much better to focus on long-term trends like the consumer migration from traditional TV to connected TV, and The Rubicon Project is taking a position in that space.