Shares of Taboola.com (TBLA 0.71%) soared on Wednesday, driven by a solid earnings report. As of 1:40 p.m. ET, the stock was up by 16.1%.
So what
The average Wall Street analyst covering the stock expected Taboola to report a net loss of $0.04 per share in the third quarter, with approximately $345 million in revenue. Instead, Taboola posted positive earnings of $0.02 per share on revenue of $360 million. Those results also exceeded the top end of management's guidance ranges.
Now what
Taboola's C-suite team highlighted stronger demand for digital ad space along with rising interest in add-on services such as Taboola's news service and e-commerce platform. In particular, the company's exclusive advertising partnership with Yahoo is bearing fruit.
"Together with Yahoo, we are incredibly excited for Taboola becoming the first ever 'must buy' ad-platform in the Open Web," CEO Adam Singolda said in a press statement, referring to a next-generation internet with stronger privacy controls.
The stock has now gained about 152% in 52 weeks, but it should be noted that the year-ago value was an extremely low starting point. Taboola's stock still stands 10% below the 52-week peak it reached in February, and 72% below the all-time high it touched in February 2021.
Although Taboola's robust report shows that Q3 was a promising chapter for the company, it doesn't completely rewrite its history. Viewed in context, it shows the company taking a notable step toward erasing its past setbacks and scripting a new growth narrative. And the results offer signals that the online advertising market is growing healthier.
Investors in other digital advertising stocks should pay close attention to Taboola's tidings, which suggest that we just might be at the start of a new bull market in the online ad sales industry. Those bullish signs certainly match the signals sent by Roku (ROKU -10.29%) last week, and The Trade Desk (TTD 1.67%) will either confirm or undermine that theory with its own third-quarter report on Thursday.
