Investing in the ad tech sector seems obvious: Advertisers crave automation and startups generate millions in IPOs. But are they a profitable bet?
The sector was in a funk for well over a year when Acacia (NASDAQ:ACIA) broke the spell with its initial public offering (IPO) in May. The high-speed fiber optics communications provider raised more than $1 million in its first day, and its price per share shot up from $23 to $30.
Interactive cloud software company Twilio Inc. (NYSE:TWLO) raised $150 million on its opening day in June, topping analysts’ estimates.
From May through September, a total of five new ad tech companies debuted as public entities, further cramming an already crowded industry.
Despite the fine showing by some of these IPOs, the question remains: Is ad tech worthy of investors’ dollars, or is the sector headed for a bust in the not-too-distant future?