- Shares of adtech companies fell on Wednesday morning on a report that Alphabet Inc's GOOG GOOGL Google will stop cross-app tracking on Android phones, following a similar move by Apple Inc AAPL.
- "We don't think there should be a forced choice between privacy and developers building their business," Anthony Chavez, VP of product management for Android security and privacy, told The Wall Street Journal.
- Google has not yet provided details about its plans for how its new systems would work. However, it plans to keep supporting current smartphone identifiers for at least the next two years and give the industry important notice before any changes.
- Following the report, Oppenheimer analyst Timothy Horan said the "initial reaction is gut-wrenching caution for all adtech names."
- However, Horan noted that the report said Google will wait "at least the next two years," and he believes that these reported changes "will only further bifurcate the sector into the haves and have-nots."
- Digital Turbine is "firmly in the winning category" as its unique access on 1.6 billion smartphones firmware/software will become more valuable and hasten the urgency for more prominent impacted players to tap into Digital Turbine's "superior proprietary" data and products.
- Horan echoes his prior view that the company appears to benefit from the pressures facing some other ad companies.
- The company's unique ad-tech ecosystem provides superior distribution and data insights for app developers, he argued, adding that the underlying power of this "unique handset platform is underappreciated," making Digital Turbine his top pick. Horan kept an Outperform rating and $117 price target on Digital Turbine shares.
- Publicly traded companies in the adtech space trading lower following the report include The Trade Desk Inc TTD, Magnite Inc MGNI, and Digital Turbine Inc APPS.
- Price Action: APPS shares traded lower by 11.90% at $49 on the last check Wednesday. TTD shares traded lower by 4.33% at $77.03, and MGNI shares traded lower by 7.85% at $12.86.
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