Advertising technology, or adtech, company PubMatic (PUBM 1.00%) has a lot going for it. In this video clip from "The Rank," recorded on Feb. 14, Motley Fool contributors Jason Hall and Matthew Frankel, CFP®, discuss their interest in the adtech market, and what makes PubMatic stand out among a handful of quality companies.
Jason Hall: Yes. PubMatic is one that's really come more and more on my radar recently. Anybody that's followed the adtech space, advertising technology space is familiar with The Trade Desk. Jeff Green and his team have done an amazing job of building such a great, powerful business that has a lot of like competitive advantages. They are like the strategic partner for a lot of the biggest ad agencies. They are a partner, not a competitor with those companies. That's a great winning position. Now on the other side of the adtech business, you have other companies like PubMatic. Now of course I'm immediately drawing a blank on the name. Matt, you got to help me out here, it's right here on the tip of my tongue. Rubicon Project merged with Telaria. I'm going to have to look it up, ladies gentlemen, I'm going to have to look it up, which is just so frustrating this is happening. Really, how can I not remember this?
But anyway, you have the buy side and sell side. The difference here for me with PubMatic and the reason that it's become so compelling to me is that this is a company that's proven on that other side of the trade. It can grow and it can grow profitably. We haven't seen everybody else be able to do the exact same thing. If you're looking for a play in adtech, and you really want to find success, what I've seen is the companies that grow the most through acquisitions and merger activity haven't been able to grow their bottom lines as effectively. PubMatic has. It's absolutely been able to grow cash flows, been able to grow revenue, been able to be more and more profitable. The addressable market is not as big for it as it is for a company like The Trade Desk that operates on the other side. But I think from here it has a lot of potential to be a big winner. My conviction that it's probably going to be a bigger winner continues to grow. That's why I put it on here, rankings as high as I did.
Matt Frankel: I mean, I just love the adtech space in general. I'm curious, Jason, where would you rank us in the scheme of digital advertising stocks? For example, The Trade Desk? Which one would you say is the bigger opportunity? Which one is the best place to put new capital to work, things like that?
Hall: I'm just a really big fan of The Trade Desk. Have you looked how much its stock price has generally held up a lot better than a lot of the others? That's because of its economic performance. I would say Trade Desk is still probably my favorite idea in the space. But at the end of the day, you've got so many big players. Alphabet is still a big winner. You want to look at a huge winner in ad tech? Look at Amazon. Here's a crazy stat that might just blow some people's minds, if you have heard me say it before. Amazon's ad business is bigger than YouTube. A lot of people don't know that. It's an enormous ad business. [laughs] Go ahead.
Frankel: Sorry. I wanted to mention the other one, Slido just blew up. I've never seen this, six people all at once said Magnite.
Hall: Thank you. Yes.
Frankel: [laughs] I knew that was going to bother you, so I jumped in.
Hall: Rubicon Project and Telaria merged so the company's Magnite. Magnite revenues continue to grow, but it just hasn't generated like the operating leverage in the profits. PubMatic's done incredible. That's a lot of it. I love you people. You are my people. [laughs] Thank you for that. Magnite is another one that I've actually looked at, I'm lightening my position a little bit because I'm going to start building out a position in PubMatic, I'm going to, it's going to happen.
