Taboola (Nasdaq: TBLA) is down 20% since making its debut at the end of July. The company went public through a SPAC, completing its reverse merger with ION Acquisition Corp. Its closest competitor, Outbrain (Nasdaq: OB), also recently went public.
Taboola is one of the largest content and ad companies in the world, helping companies monetize outside of Facebook (NASDAQ: FB) and Google (NASDAQ: GOOGL). Currently, it has a valuation of $2.2 billion, and the company was able to raise $560 million by going public which it will use to increase growth. While the last decade has been tough for online publishers and ad tech companies (not named Facebook or Google), there are signs that conditions are improving as many publishers have gone public recently. Further, increasing ad costs are leading to companies investing in new marketing channels and creating their own content which could benefit Taboola.
TBLA Profile
Taboola was founded in 2007 in Israel by Adam Singolda to provide a recommendation engine for video content. The company found traction when its technology was used by major online publishers to auto-generate video content based on a user's browsing history. By 2019, it was providing 450 billion recommendations monthly.
From this, the company branched out into all types of content that it would recommend. This evolved into its current ad business, where it helps publishers monetize their websites. As a result of its growth, Taboola has branched out into all types of products and services for publishers to increase conversions and revenue.
Currently, Taboola has more than 13,000 advertisers use its network to reach over 500 million daily active users on the sites of more than 9,000 publishers. In its last quarter, Taboola had revenue of $303 million and profits of $18.6 million. It believes its total addressable market is in the tens of billions that are spent on advertising outside of Facebook and Google.
Stock Price Outlook
Over the last decade, there has been a slew of ad tech companies that have gone public. However, none have been great investments. And, it's also worth noting that these companies were able to go public when markets were frothy but saw declines of more than 50% when markets got bearish.
Thus, it's hard to be too bullish on Taboola given these headwinds. Simply put, Facebook and Google are hoovering up the profits in advertising, similar to how Apple (NASDAQ: AAPL) does in smartphones. Thus, Taboola could be a good trading vehicle but is unlikely to be a great, long-term investment.