Shares of online advertising expert PubMatic (PUBM +1.67%) skyrocketed on Tuesday morning. At 12:30 p.m. ET, the stock had gained 40.8%, and the intraday chart was still trending higher. PubMatic published third-quarter results last night, crushing Wall Street's estimates across the board.
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Wall Street analysts didn't see these numbers coming
The company posted analyst-stumping financials, citing strong demand for connected TV (CTV) advertising and a successful launch of artificial intelligence (AI) tools and features across PubMatic's platforms.
Revenues fell 5.3% year over year to $68.0 million, largely due to massive political ad budgets in the year-ago quarter. Adjusted earnings dropped back from $0.12 to $0.03 per diluted share, again due to the much lower political ad volume.
The Street consensus had pointed to a net loss of $0.22 per share on revenues near $64.0 million. PubMatic crushed those projections.
NASDAQ: PUBM
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Why I'm not buying the bounce just yet
The Q3 results also exceeded the high end of management's guidance for this period. Backing out the political spending figures, CTV sales rose more than 50%. PubMatic is doing something right here, and the digital advertising sector is coming back to life after a couple of difficult years.
That being said, today's big jump is more of a recovery than a victory march for PubMatic. Trading at $10.80 per share right now (ah, that's up to a 41.2% gain, 20 minutes later), PubMatic's stock still sits 39% below its yearly highs and roughly in line with the price level seen before August's Q2 report. It's also nowhere near the all-time record of $69.92 per share, notched in the spring of 2021.
That's a common tale in the online advertising market, but PubMatic's multiyear price drop is steeper than most. The company runs in a show-me mode right now. This AI-powered earnings surprise was a good start, but can PubMatic keep it up in 2026 and beyond? Only time will tell, and I don't mind watching this struggle from the sidelines. There are clearer long-term winners in this industry, after all.
