In this artice, we will look at the 8 Worst AdTech Stocks To Buy Now. Let’s look at where HubSpot, Inc. (HUBS) 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).
HubSpot, Inc. (NYSE:HUBS)
Short Interest: 1.71%
Number of Hedge Fund Holders: 80
HubSpot (NYSE:HUBS) is an adtech company that provides a customer platform for businesses to grow and connect. Its unified platform offers prime connection for customer-facing teams. The platform includes artificial intelligence-powered engagement hubs, a connected ecosystem with more than 1,500 app marketplace integrations, a smart customer relationship management product (CRM), a community network, and educational content.
The company’s engagement hubs include Sales Hub, Marketing Hub, Operations Hub, Service Hub, Content Management System Hub, and Commerce Hub. These hubs allow companies to engage and attract clients through the customer lifecycle. HubSpot’s Smart CRM is its primary layer of operations. It brings customer data to AI, powering the customer platform with unified customer profiles and tools to manage and govern teams and business processes. It specializes in relating and selling to mid-market business-to-business (B2B) companies. HubSpot (NYSE:HUBS) functions on a subscription basis.
The company is on the path to profitability. Its Q2 2024 revenue grew by 21% year over year in constant currency, and its total customers increased to 228,000 individuals across the globe. 11,200 net customer additions in Q2 drove the company’s customer growth. Its pricing improvements and product enhancements have led the company to the low end of the market. The company has also made it easy to get started with HubSpot (NYSE:HUBS), removing friction and streamlining the checkout process so consumers can make clear decisions about the seats and functionality of their choice. HubSpot (NYSE:HUBS) introduced its pricing model changes in March, lowering the price point to get started, removing seat minimums, and creating a core seat for customers who wish to edit CRM records. In turn, it recorded solid expansion trends with a multi-point net revenue increase in the third month of use. Customers on the new pricing model have the power to purchase precisely what they need, expanding as they go. This is one of the primary reasons behind its increasing popularity.
HubSpot (NYSE:HUBS) is also driving innovation with its Spring Spotlight product launches. As part of its first Spring Spotlight, the company rolled out significant updates to service up and launched Content Hub. Its ultimate goal was to provide an AI-powered content marketing solution to help marketers create and manage content. Public response to this facet has been promising, with the attach rate for Content Hub to Marketing Hub tripling since its launch. It now stands at around 50% for new marketing hub wins. Innovative AI features like AI blogs, content remixes, and brand voice are the primary drivers of the high attach rate.
Renowned brands like TripAdvisor, Morehouse College, and World Wildlife Fund for Nature, are leveraging HubSpot content solutions for growth, highlighting the company’s potential in product innovation and profitability.
Overall, HUBS ranks fifth 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 HUBS but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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