ADBE Stock’s Buyout Sends TUBE Stock through the Roof
Adobe Systems Incorporated (NASDAQ:ADBE) announced its plans to acquire TubeMogul Inc (NASDAQ:TUBE), which drove TUBE stock wild with an 81% gain.
The massive 81% gain followed the announcement of Adobe’s acquisition of TubeMogul for $540.0 million net of debt and cash. TubeMogul is a video advertising company with a single platform that enables brands and agencies to plan and buy video advertising across desktops, mobile, streaming devices, and TVs. Adobe hopes to boost ADBE stock by using TubeMogul to aid its “Adobe Marketing Cloud” solution.
The press release states that “Adobe’s acquisition of TubeMogul will create the first end-to-end independent advertising and data management solution that spans TV and digital formats, simplifying what has been a complex and fragmented process for the world’s biggest brands.” (Source: “TubeMogul Acquisition Brings Leading Video Advertising Platform to Adobe Marketing Cloud,” BusinessWire, November 10, 2016.)
ADBE stock has risen nearly 11% since the beginning of 2016, but today fell 3.5%, following many other larger tech stocks that ran into trouble on the market. One possible explanation for the drop is the fear that a Donald Trump presidency will negatively affect the tech industry for the next four years.
At any rate, ADBE stock has been steadily trending upward for over five years, increasing by 268% in that time. TUBE stock, on the other hand, was having a rather poor showing in 2016, trending down for the majority of the year. That is, until this buyout sent stock prices crazy, making TUBE a pretty great investment for anyone prescient enough to see this acquisition coming.
Adobe is banking on video consumption and video advertising being strong bets for the future, according to the press release.
“Video consumption is exploding across all devices and video advertising is the fastest growing advertising category. Adobe is the leader in video content creation and delivery with its Premiere Pro CC and Primetime solutions. Adobe’s acquisition of TubeMogul will enable brands to capitalize on the meteoric shift to online video.” (Source: Ibid.)
A lot of companies these days are banking on video marketing dominating for the foreseeable future, so Adobe is definitely not alone. We’ll have to keep an eye on ADBE stock going forward to see if this direction will pay off down the line.