The latest earnings round shows public markets aren’t for the faint-hearted

The year 2025 has been widely touted as a comeback year for mergers and acquisitions, and even some initial public offerings, in ad tech, although Wall Street’s reactions to the latest round of earnings calls from companies in the sector will likely prove a drag on valuations.

For example, revenues for the sector’s big two, i.e., AppLovin and The Trade Desk, issued double-digit annual revenue increases (44% and 26%, respectively), but the slings and arrows of the public markets resulted in precipitous price declines in recent weeks.

In the case of The Trade Desk, falling short of its earlier earnings guidance meant its market capitalization lost billions of dollars in value in the space of a day, and in recent weeks, with its plan to regain momentum likely to stimulate many talking points in the year ahead.

And in the case of AppLovin, the gravitational pull on its stock price came from different means. The company’s stock price reached an all-time high after it issued its latest quarterly earnings, with the company’s advertising division doing so well that it announced plans to sell its app development division for $900 million to focus on media, which boomed 73% in Q4.

However, the stock declined by as much as 20% in the days after reports from short-seller firms Fuzzy Panda Research and Culper Research alleging unethical practices, including ad fraud and data theft — AppLovin denies these claims.

Meanwhile, Taboola’s market fortunes experienced a similar pattern to The Trade Desk’s in recent weeks, issuing 23% full-year revenue growth for 2024. But its forecasted earnings for 2025 fell below expectations, resulting in a double-digit price decline in the days afterward. This is despite Taboola expanding its operations, with the company (which founded its business on native ad units) telling Business Insider that it is going to enter the display advertising business in the year ahead, giving it a total addressable market value of $55 billion in its own estimation.

Elsewhere, the recently disclosed earnings of Magnite and PubMatic are a likely indication of why the public markets aren’t necessarily thrilled by the fortunes of display advertising right now. Both companies issued single-digit revenue increases for the closing quarter of 2024 last week — Magnite’s revenue increased 4%, while PubMatic’s was up 9%. Although an observed “cratering” of Magnite’s CPMs during the period prompted one analyst to ask, “Is the open internet healthy?”