In recent weeks, the ad tech sector’s leading lights have issued their financial results for the closing quarter of 2024 — traditionally, the big-money period of the financial year — and while almost all reported numbers that were up and to the right, the markets reacted negatively.
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.
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