Despite the Nasdaq Composite entering correction territory with an 11.3% decline between February 19 and March 21, one investor has chosen to purchase shares in PubMatic, a high-growth, cash-rich tech stock. The investor remains cautious due to the historically high valuations of stocks, as indicated by the S&P 500’s Shiller P/E Ratio of 35.28, which is more than double its average reading.\n\nPubMatic is a cloud-based, supply-side, programmatic ad platform focusing on digital advertising, including video, mobile, and connected TV (CTV). Recently, its shares dropped due to first-quarter guidance and full-year outlook not meeting analyst expectations. This was attributed to a bidding algorithm change by Alphabet’s Google DV360, impacting revenue temporarily until mid-2025. Beyond this hiccup, PubMatic’s digital ad segments, particularly CTV revenue, are experiencing significant growth.\n\nThe company’s decision to build its own cloud-based infrastructure years ago positions it for superior operating margins as revenue scales. PubMatic boasts a cash-rich balance sheet with $140.6 million in cash, cash equivalents, and marketable securities, and no debt. The company has also been actively repurchasing shares, reducing its outstanding share count by over 8% in two years. PubMatic’s current valuation at 12.7 times forward-year EPS makes it an attractive investment in the digital-ad revolution.— news from The Motley Fool
