In this artice, we will look at the 8 Worst AdTech Stocks To Buy Now. Let’s look at where Criteo S.A (CRTO) stands against other worst adtech stocks.
Overview of the AdTech Industry
The adtech industry includes an array of products and companies, including supply-side platforms (SSPs), demand-side platforms (DSPs), data management platforms (DMPs), ad exchanges, and more. According to data by Allied Market Research, the global adtech market stood at $748.2 billion in 2021, and is anticipated to reach $2.9 trillion by 2031. This translates to a compound annual growth rate of 14.7% between 2022 and 2031. Experts believe that the industry is well-poised for growth, with the global supply-side platform segment (SS) reaching a market size of $117.32 billion by 2033. Technological advancements, supportive government policies, and higher consumer demand are all factors expected to drive this growth.
In addition, changing trends such as the exponentially growing use of advanced technology like artificial intelligence and machine learning, growing Internet and digital penetration, growth of social media platforms and better prospects for the gaming industry, are all responsible for this growth. In-app advertising, interactive ads, and higher use of connected TV (CTV) have become the dominant trends in the AdTech industry, driving growth and change.
Trends in programmatic advertising are also expected to improve, allowing the demand-side platform software market size to reach $120.1 billion by 2033. The demand for improved targeting and measurement capabilities for online ads is also an important factor to consider in this growth. While the AdTech industry seems promising on its own, the increasing use of artificial intelligence across all platforms is making it even more appealing.
Recent Happenings in the AdTech Sector
Despite its positive trends, the AdTech industry in the US is experiencing certain headwinds, the most prominent being Google’s highly profitable AdTech business going to trial. The Department of Justice and a coalition of states filed a lawsuit against the company in 2023, claiming that the company is illegally dominating the digital ad marketplace, leveraging its market power to suppress competition and innovation. A trial began this month, and the Department of Justice rested its case against its parent company for operating a monopoly in the AdTech market. The tech giant earned more than $200 billion through the placing and selling of ads in 2023, arguing that the reason behind this success is the “effectiveness” of its services. Prosecutors, however, claim that the company has used its dominance to shun rivals.
In addition, smaller AdTech firms are raising concerns over Google’s cookies alternative, Privacy Sandbox. While its ad business is under global scrutiny, the company is making adapting to Privacy Sandbox a critical necessity. However, regulators in the US and UK are of the opinion that the Privacy Sandbox would give Google the lion’s share of control over the digital advertising market, which might negatively affect competition.
Potential technology development delays seem to be negatively affecting smaller AdTech firms, changing the course of the industry. While conclusive results aren’t out, such changes are highly likely to alter AdTech industry trends.
Our Methodology
To list the 8 Worst AdTech Stocks To Buy Now, we used the Finviz screener, ETFs, and rankings to first identify 15 AdTech stocks. Next, we narrowed our list by selecting the 8 stocks that have high short interest but also a high number of hedge fund investors. Finally, these stocks were ranked in ascending order of their short interest. We have also added the number of hedge funds holding each stock as a secondary metric.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
8 Worst AdTech Stocks To Buy Now
Criteo S.A (NASDAQ:CRTO)
Short Interest: 3.85%
Number of Hedge Fund Holders: 18
Criteo SA (NASDAQ:CRTO) is a France-based company that specializes in digital performance marketing and ranks third on our list of the worst adtech stocks to buy now. The company’s solution comprises the Criteo Engine, its data assets, advertiser and publisher platforms, and access to inventory. The Criteo Engine comprises global hardware and software infrastructure and several machine learning algorithms, such as recommendation, prediction, and bidding. Criteo Engine can deliver advertisements through several marketing channels and formats, such as native advertising banners, display advertising banners, and marketing messages delivered to opt-in emails. These advertisements are delivered on all screens and devices, including mobile web browsers on smartphones and tablets, web browsers on laptops and desktops, and mobile applications. Criteo (NASDAQ:CRTO) operates in around 90 countries and manages operations through a network of more than 30 international offices located in the Americas, the Asia-Pacific region, and Europe.
The company is running on solid financials, focusing on becoming a Commerce Media powerhouse. It recorded double-digital organic growth for the third consecutive quarter. The primary drivers of these positive trends are the company’s efforts to focus on consumers throughout the buyer journey, leverage our unique commerce data assets and AI for growth, and streamline supply-and-demand side relationships.
Criteo (NASDAQ:CRTO) also focuses on establishing partnerships for growth, and has worked with Microsoft to bring high-quality native advertising to commerce audiences. It is now expanding its partnership with Microsoft to its Retail Media suite in a two-fold collaboration. Firstly, the company is set to bring Microsoft Advertising’s substantial demand to its global network of 225 retailers. This will enable them to look into budgets from Microsoft’s 500,000+ advertisers, concurrently expanding the reach and value of their inventories. Secondly, the company was selected by Microsoft to act as its preferred on-site partnership.
Criteo (NASDAQ:CRTO) is working to consolidate the Retail Media supply to its platform, with the retailer’s transition from Microsoft Advertising to Criteo’s platform expected to begin in 2025. The collaboration is expected to solidify the company’s position as an adtech leader, creating a unified access for all media buyers and gaining further competitive edge.
The company also has future growth plans in place, with the aim to increase retail monetization and advertiser outcomes throughout the consumer journey. It is also looking to leverage predictive modeling for privacy-increasing targeting, streamline creative formats and campaign workflows, and product recommendations. Criteo (NASDAQ:CRTO) is also increasing its market share gain in Retail Media, experiencing a 30% year-over-year growth in Q2. It holds a leading market footprint, with around 65% of the top 30 retailers in the Americas and approximately 50% of the top 30 retailers in EMEA. Furthermore, the company is partnering with new retailers in the US, such as Dollar General Corp, Belk, and QVC.
Overall, CRTO ranks third among the worst adtech stocks to buy now. While we acknowledge the potential of adtech companies, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than CRTO but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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