It was a nervous first day on the market for video ad tech platform TubeMogul, as it recovered from a reduced stock price to trading almost 30% over it.
On the eve of its IPO, TubeMogul reduced its share price, drastically cutting the target for its proceeds. Previously, TubeMogul has put its share price in the $11 to $13 range, but then it revised it to $7 a share last night, bringing down its expected valuation from $397 million to just under $250 million near the end of market close today.
Despite the underwhelming start, the stock price opened up as the day went on, rising to $10 a share an hour after opening, and hitting $10.73 at the top of the hour. That’s a sizeable jump and should give TubeMogul’s investors some relief.
The Emeryville, CA-based TubeMogul is a demand-side video advertising platform that provides video ad placement and analytics capabilities to its client brands.
Ad tech firms tend to have even more of a rollercoaster ride than usual when they go public because, most investors have a hard time understanding what exactly they do. In TubeMogul’s case, it’s part of a sector that’s already seeing plenty of lows this year, which is probably what prompted it to revise its price.
Analysts say the reason for the overall dip in the sector is largely that ad tech companies and their business models are extremely difficult for most public market investors to understand. What’s more, most public ad tech firms are relatively small, making it difficult for many investors to justify spending the time required to properly understand them.
“It’s difficult to explain to most investors what ad tech business models are, let alone how rapidly they’re changing and what differentiates one company from another,” explained Brian Wieser, an analyst at Pivotal Research Group.
Despite its strong performance today, there’s no guarantee that it will continue its upward trajectory. Fellow ad tech companies Rocket Fuel and Rubicon Project both saw first day jumps, only to end up trading below their IPO prices currently.