New industry data on TubeMogul Inc (NASDAQ:TUBE) provides a brutal reality check for the digital video advertising company that has recently become a Wall Street darling.
This infatuation has given TubeMogul an optimistic $400 million market valuation. But that valuation is not supported by key industry factors defined by big-data analysis firm comScore.
The data on unique video views and ad videos viewed show that TubeMogul’s performance is falling behind the rest of the industry.
TubeMogul’s ad view traffic began its downhill slide in December, falling 9 percent. January ad views year-over-year dropped almost 21 percent and more than 16 percent in February.
In contrast, BrightRoll, a Yahoo division, enjoyed 116 percent growth YOY in December, 44 percent in January and 39 percent in February.
The trend for TubeMogul, then, has clearly been just the opposite of the industry in December, January and February.
See various viewpoints here, and the chart below. Our chart shows key comScore data. The data mashes month-by-month figures for Google, BrightRoll, AOL, LiveRail (Facebook acquisition), SpotXchange, Specific Media, Hulu, Tremor Video, Videology Inc. and TubeMogul going back as far as June 2009.
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It’s also clear that, considering ad videos viewed, TubeMogul has tumbled from being 79 percent as large as BrightRoll to about 55 percent.
BrightRoll is growing admirably. But TubeMogul is shrinking.
The following chart shows that another important indicator – ability to attract new eyeballs – unique video viewers – has fallen significantly for TubeMogul:
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Investors can see that not only have actual numbers dropped each month from December through February, but unique video viewers declined by 10.8 percent in February compared with the previous February.
Though conventional wisdom suggests TubeMogul stock can’t really be valuated, the charts suggest a reasonable means of getting to a fair valuation. Considering that TubeMogul comes in at about 55 to 63 percent of BrightRoll’s size, rather than a $400 million valuation, a reasonable valuation would be about $220 million to $252 million.
Wall Street may be raising an admiring eyebrow at TubeMogul, but the numbers reveal the company’s ugly little secrets: the industry is somewhat growing while TubeMogul appears to be shrinking.