Kubient, Inc. (NASDAQ: KBNT) shares are jumping. In fact, they started trading the week more than 9% higher, and the volume indicates that investors are decidedly bullish to support the uptrend. Kubient is doing a lot to earn the interest. Still, investors are also embracing the fact that Saudi- based Mithuq Capital, a big-money investment company, is also taking an interest in Kubient's drive to eradicate ad fraud through its Audience Cloud Marketplace platform. That keeps an old adage in play- follow the money.
Indeed, that appears to be happening. And while profit-taking may have chiseled away some of its impressive gains over the past month as markets fight to stay above water, the excellent news is that KBNT is showing the power to decouple from broader market weakness and trend higher on its own. Deservedly so.
Kubient has been blazing a trail in recent quarters to show the value that its Audience Cloud ad-fraud prevention platform can bring to advertisers and ad hosts. The better news is that KBNT's hard work is paying off, resulting in its innovative ad-fraud detection technology earning industry accolades and new-client attention. Better still, KBNT is leveraging the strength of its platform to target an online ad market where hundreds of millions of dollars are put to work daily without any objective measure of content control. The goal of Kubient- make sure clients get what they pay for.
Of course, the success of KBNT in that mission trickles down to its investors, making current share prices attractive despite recent bull market moves. Moreover, it brings heightened attention to the other positives in play- namely why deep-pocketed Mithuq Capital, which already has a reported $300 million stake in another ad-tech company, Tremor (NASDAQ; TRMR), has taken a liking to small-cap Kubient. The obvious- Mithuq may have bigger plans for Kubient. Or if they simply like the investment proposition basing decisions on future returns, it's a win as well. In either case, investors at current levels may do well to follow the money, especially with investor cash being the highest endorsement possible for an emerging growth company.
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Kubient Is Different, And That's Good
Those "endorsements" are getting bigger. Moreover, Mithuq isn't alone perpetuating a bullish bias. Insiders are increasing positions and now reportedly own over 41% of the outstanding stock. Better yet, the two groups are buying, not selling. Uncommon for a small-cap stock, not a single Form-4 was filed last year showing intent by any insider to sell shares. Thus, as shares continue to make their way to stronger hands, it's understandable that KBNT stock is bucking the trend against a weakening NASDAQ market, which now has more than 25% of its NASDAQ-100 stocks quoted at bear market levels. And with KBNT on a mission to create additional shareholder value in 2022, its trend higher may be just beginning.
Interestingly, trading patterns show that investors take sizable chunks of KBNT stock, tighten the float, and let supply and demand factors push shares higher. Thus, the daily closing price may not always be the best strength indicator. The intraday trades can also present a between-the-lines look at how disciplined accumulators can gobble up shares and keep the KBNT share price relatively stable. Still, once market conditions catch a wave of new money bids, stocks that are strong today are the ones likely to explode higher when bullish sentiment puts the wind at their backs. All indicators suggest that Kubient will be on that list.
Not only that, they've earned their place. Investors following KBNT understand that the specialized services Kubient provides are getting to be more than a want; it's a need. That need can turn new business interests into cash. Even better, KBNT may be the best at what they do, making this investment consideration a value too big to ignore.
Ad-Fraud Prevention Is Billion-Dollar Business
Not only should investors pay attention, and they are, but they should also take a minute to understand how big KBNT can get over the next few quarters. That's happening by design, with Kubient showing the revenue-generating power inherent to its Audience Cloud platform, one they expect will transform the digital advertising industry and become the gateway to reliable and effective audience-based marketing through its next-generation cloud-based technology.
Moreover, by taking an aggressive posture to prove its advantages, KBNT could become the go-to source to enable efficient marketplace liquidity for buyers and sellers of digital advertising, which puts billions of potential revenue dollars into its near and long-term crosshairs. More importantly, they are doing things differently than their competitors. Thus, it's not exactly a platform-to-platform consideration for those pointing toward a competitive landscape as a high barrier to clear. Instead, Kubient is taking an existing service and making it better - much better. Hence, considering KBNT as the competition for others to pass may be more appropriate.
By the way, investors don't need to wait for this "next best thing" in ad-fraud prevention to hit the markets. It's already there. The company created Kubient Audience Cloud, an innovative and comprehensive platform that facilitates a flexible open marketplace for advertisers and publishers to reach, monetize and connect their audiences. As noted, its advantages are inherent to being different.
The Kubient difference is also a significant advantage because its platform provides a transparent programmatic environment utilizing proprietary AI-powered pre-bid ad fraud prevention technology. Not only that, its platform uses additional embedded proprietary real-time bidding marketplace automation for the digital industry that generates detailed, accurate, and actionable data at lightning-fast speeds. Best of all, it allows advertisers to know they are getting what they paid for before they actually pay.
Its market reach is another outstanding feature. Its Audience Cloud platform has a virtually unlimited reach to offer a best-in-class solution for brands and publishers that demand transparency and the ability to reach audiences across all channels and ad formats. But it gets better. Perhaps the best part of Kubient's Audience Cloud platform is that everyone in the digital ad channel can benefit. And, because it can save a large advertiser potentially millions of dollars a year, and billions in aggregate, by making sure messages are actually seen by real people, it's fair to assume that in addition to helping clients, it's a platform they need.
Others in the investment sector are taking notice, too. Kubient engaged Lake Street Capital to evaluate ways to drive shareholder value higher, faster, through additional innovations and enhancements to its technological capabilities. That relationship puts multiple strategic options in play, including the optionality to merge, acquire, or invest in complementary businesses at an accelerated pace.
Incidentally, growth through acquisition remains a vital part of the Kubient game plan. Thus, having an ally in Lake Street, whose role is to look for strategic opportunities and investments, should add considerable value to the forward-looking opportunities. Undoubtedly, the collaboration has established a conduit that aligns KBNT's mission with its shareholder base. Remember, insiders own a significant number of shares. So, deals made through Lake Street can be more than accretive; they can be potentially exponential value drivers in the near and long term.
Platform Speed Is One Element Unmatched
Still, staying in the present is fine, too. In that respect, Lake Street may already be close to finding deals that amount to a merger of equals or an outright acquisition. The good thing on that front is that KBNT has the luxury of negotiating agreements from a technological position of strength by having an impressive portfolio of assets. And, don't think competitors aren't paying attention. While KBNT competitors may be able to do some of the things Kubient can, few, if any, can match Kubient's under 300 milliseconds speed to detect ad fraud. While a potential deal-maker for KBNT on its own, speed is still only part of the competitive advantage. Its platform's detail, accuracy, reliability, and scalability are other features too good to ignore. Thus, to modify an old saying goes, if they can't beat them, they might as well join them.
Actually, for KBNT and other specialty companies, consolidation makes sense. That's especially true in a competitive industry where billions of dollars are up for grabs for those that can do things the best. Hence, whether Kubient goes it alone, partners, or acquires, they will always be in a good place since they do have some of the "best" attributes. But even with that said, while working in a market that is getting bigger as technology continues to accelerate the speed at which data is transferred, growth through acquisition can expedite making an already excellent company even better. Thus, both paths for KBNT could lead to an end-road of business riches.
But, what's the driver to make that happen? Well, it's a simple answer. While reading this article, you undoubtedly had a flurry of ads pop up on the screen. Now, these ads weren't set to show days ago; they happened instantaneously based on many factors learned about you. More importantly, they are served with the pretense that a real person at that exact time will be reading them. Getting the ad to show is the easy part. However, there is much more to consider going on backstage.
As an article or web page loads, the behind-the-scenes action is incredible, with thousands of advertisers competing in millisecond speed to bid and place ads to drive user interest and reach a targeted audience to deliver their message about the product or service offered. When the viewer sees the ad, it's a result of potentially millions of scans performed at incredible speeds that decide on the ad itself as well as its placement. However, while that process alone is mind-boggling, it's not what makes Kubient technology a must-have product.
What makes Kubient technology invaluable is that beyond the speed of execution, it has an inherent ability to recognize whether the internet traffic for where the ad is placed is being visited by humans or bots. In other words, it sniffs out ad fraud in the blink of an eye, resulting in cost savings to an advertiser. Obviously, if an ad is displayed to a bot, it isn't worth the money spent. Advertisers know this. However, the problem they faced is that until Kubient's platform, when an advertiser bid to land a spot on a web page, they had no insight into whether its ad was viewed by a human or a bot. There was no recourse, either. These ads are done and gone in seconds. Thus, billions spent, sometimes millions wasted. But, Kubient changed the dynamic and positively disrupted the digital ad sector.
That's excellent news for Kubient, its shareholders, and its clients. And as noted, in addition to being cost-effective for clients, Kubient technology sleuths ad fraud in a fraction of a second. The result - no ad bid gets placed if the millisecond scan indicates it's a bot. If it's legit, the page is released, and the advertiser hits the offer. For all intents and purposes, it's an invaluable tool to reduce and even eliminate fraudulent ad spending on views that have zero chance of resulting in a sale. With this in mind, Kubient and its investors benefit from a massive market opportunity. Its clients, though, can save billions in the process.
A Massive Market Opens To Kubient
Yes, billions. Current data show that ad-fraud costs advertisers more than $13 billion per year. While that market offers substantial revenue-generating opportunities, it's a drop in the bucket compared to the expectation that ad fraud will reach upwards of $100 billion by the end of 2023. The thing is, Kubient is showing that ad fraud can be stopped. Therefore, by utilizing Kubient, advertisers don't need to account for residual waste as a part of getting what they pay for. Operating results show that more clients realize the value proposition, which helped push KBNT revenues significantly higher.
In fact, revenues are pushing their highest levels ever. Kubient generated roughly $2.9 million in 2020 revenues. But, since then, those numbers are surging higher, resulting in KBNT posting a net revenue increase of 141% year-over-year and 35% quarter-over-quarter to $677,000. Notably, those gains are organic, coming through an increase in partnerships on both the supply and demand side of the Audience Cloud marketplace.
The better news is that a revenue-generating tailwind follows Kubient into the new year. Although the company doesn't provide guidance, connecting the dots suggest that its revenue trajectory is steepening. And, with the ad-fraud market expected to explode higher in 2022-23, revenues could spike appreciably in the process. Here's more good news on a valuation front: Kubient has only about 14.4 million shares outstanding. Better still, with 41% of those shares tightly held and a tightly held interest by Mithuq, investor demand could propel its market cap considerably higher as investors target a return to 52-week highs of $16.26 per share. Incidentally, re-claiming that level makes sense; KBNT appears better positioned today than when they posted that considerably higher stock price
Moreover, after a successful capital raise last year, Kubient has the cash, talent, and technology to meet new challenges head-on. Thus, several factors point toward Kubient being ripe for investment consideration for those seeking undervalued investment opportunities.
Why Kubient In 2022?... They Are Growing
Foremost, Kubient's layers of platform functionality make it a best-in-class platform to head off ad fraud, making it a no-brainer for ad clients to get on board. There's also a place for ad platforms to embrace the technology, especially when digital ad budgets typically go through a tight funnel into the hands of a single provider. This means that clients can and often move away if their platform isn't trustworthy. Ad hosts have significant skin in the game to ensure they aren't serving bots.
Still, new investors' biggest attraction to KBNT is that Kubient is embedded in growth mode, revenues are tracking higher, and business at the end of 2021 should include an appreciable tailwind into the new year. Not only that, a low O/S count and more than 41% of its shares being tightly held can also contribute to rising prices if KBNT delivers on its near-term objectives. Of course, as alluded to, following the money adds to the value proposition and helps validate the KBNT mission. Thus, a sum of its parts quickly equates to a compelling investment proposition that should be considered sooner than later.
Best of all, Kubient can justify a substantially higher share price valuation today. Still, after considering the accretive opportunities in play, a deal with Lake Street to increase shareholder value, and with KBNT stock proving it can defy the bears in weak markets, what's excellent today can be better tomorrow. Thus, Kubient shares should remain in fashion for quite a while.
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