How to Buy Outbrain (OB) Stock

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Contributor, Benzinga
August 11, 2021
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Open4.120Close4.130Vol / Avg.38.163K / 112.609KMkt Cap207.142MDay Range4.070 - 4.18052 Wk Range3.335 - 5.950

Among the groundbreaking attributes of entrepreneur Andrew Yang’s ultimately failed bid for the U.S. presidency was the concept that data is this century’s version of oil. While fossil fuels helped spark the transportation industry in the prior century, this time around, personal data provides the catalyst for a new paradigm in commerce: personalized content and advertisement.

Software technology firm Outbrain pioneered the very concept of online content recommendation, connecting publishers with targeted prospective consumers. By dramatically improving engagement, Outbrain’s initial public offering (IPO) could be a gamechanger in the broader online ad campaigning industry.

Outbrain Financial History

Though the official, euphemistic term for Outbrain’s core business is content recommendation services, many critics, including “The New York Times” prefer a more pointed label, clickbait ads. As Times writer Tiffany Hsu stated, Outbrain hopes “to lure readers the way anglers use pieces of dead fish to lure other fish.” While hardly flattering, it’s arguably a statement of inevitability.

Much like the new car smell universally fascinates customers, marketing experts across all industries appeal to their underlying products’ best attributes. Less discussed is the dirty work to keep these products on the road. For instance, all vehicles require routine maintenance, a non-universally alluring concept. Yet maintenance must occur, which speaks to Outbrain’s necessary services. 

Unfortunately, major media outlets can’t survive purely on their journalistic or editorial rigor. To fill the financial gap, Outbrain pays companies and news organizations to host clickbait ads, which in turn sends content consumers to more than 7,000 digital destinations. And yes, business is good.

In 2020, Outbrain generated revenue of over $767 million, up nearly 12% from 2019’s sales tally of $687.3 million. More impressively, the adtech firm posted net income of $4.36 million last year, comparing extremely favorably to a net loss of $20.5 million in 2019. This outperformance reflects the fact that online content-related businesses represented the few winners during the COVID-19 crisis. With people quarantining at home, they had nothing better to do.

Finally, prospective buyers can be encouraged that sales momentum continued into the most recent 1st quarter of 2021. During the 3 months ended March 31, Outbrain rang up revenue of $228 million, up almost 29% from the year-ago quarter. Also in Q1 2021, the company took home net income of $10.7 million.

Outbrain Potential

One of the most complex IPOs from a narrative standpoint, Outbrain’s public debut epitomizes the ever-rising conflict between journalism and editorial ethics versus the capitalist ethos that keeps the lights on. As Angèle Christin, assistant professor of communication at Stanford stated, “It is impossible to look at the recent evolution of journalism without looking at the evolution of online advertising because the two things are completely interconnected.”

Arguably, Outbrain is the most controversial IPO this week because its dramatic success symbolizes acquiescence. With the gradual decline of print media and the collective readership’s pivot to online content, major news establishments discovered that less rigorous outlets (extremist sites, conspiracy blogs) imposed an asymmetrical impact on the public discourse. To stay relevant both from a business and ethical perspective, otherwise reputable agencies brokered a deal with the devil of clickbait ads.

To be sure, no one enjoys bombardment from annoying advertisers or worse yet, becoming a victim of misleading banners. Therefore, the introduction of OB stock doesn’t necessarily carry a feel-good storyline.

At the same time, Outbrain is an economic necessity. The rise of digital media suggests readers want convenience in their content. But if they want superior content, they must either pay for it or endure the nuisances of clickbait ads. Based on Outbrain’s stellar financial performance leading into Q1 of this year, it’s evident that content consumers are more than willing to make the tradeoff.

Therefore, clickbait is here to stay and that bodes well for OB stock.

How to Buy Outbrain (OB) Stock

In most cases involving new investors, people invest via the secondary market or exchanges such as the Nasdaq or the New York Stock Exchange. The term secondary refers to the fact that people trade already-existing securities. Thus, the stocks in question represent secondhand transactions.

In contrast, an IPO is an example of a primary market transaction, or the first trade stemming from newly created securities. Here, a private enterprise seeking to go public creates equity shares. From there, underwriters help find this fresh batch of pre-IPO shares a home, typically institutional investors for purely profit-based reasons.

Logically, the IPO process tends to shut out retail buyers. In most cases, then, individual investors must buy new shares at the open in secondary markets. While disadvantageous from a price perspective, procuring at the open is easy if you already know how to buy stocks. If you don’t, just follow the simple steps below.

Step 1: Pick a brokerage.

During the early days of internet-based brokerages, investors focused on platform cost. Nowadays, with everyone advertising commission-free trading, the emphasis regarding best brokers centers on features.

A great example is Robinhood. The mobile trading app invites its members to buy Outbrain shares at their initial offering price, affording a potential discount to what OB stock might fetch on its launch day. Essentially, Robinhood plays the role of an institutional investor, but on the behalf of public buyers.

Step 2: Decide how many shares you want.

Since IPOs tend to be feast-or-famine affairs, you’ll want to carefully decide your share count. A higher number of shares affords more profitability potential but at the risk of greater losses should things go awry.

Step 3: Choose your order type.

Before taking the plunge, you should familiarize yourself with these key market concepts:

  • Bid: The highest price a buyer will offer, the bid is always lower than the ask.
  • Ask: The lowest price a seller will accept, the ask is always higher than the bid.
  • Spread: The variance in the bid-ask price, the spread clues you into data regarding liquidity and risk. Narrower spreads imply bulls and bears are willing to negotiate, thereby indicating higher liquidity and lower risk. The opposite is true for wider spreads.
  • Limit order: A transaction request to be filled only at a specific price, limit orders offer full control but no execution guarantee.
  • Market order: In contrast, a market order emphasizes convenience via guaranteed fulfillment at the going rate. However, market orders fill at unfavorable terms (like buy orders on the ask).
  • Stop-loss order: Protective mechanisms designed to cut losses, stop-loss orders will fulfill at either a predetermined price or any price lower than the requested rate.
  • Stop-limit order: Conversely, you can choose a stop-limit order, which only exits your position at a predetermined price — not that stop-limit orders can be rendered useless if the target stock keeps falling.

Step 4: Execute your trade. 

To execute a market order, follow these steps:

  1. Select your action type (buy or sell).
  2. Enter the shares you want to acquire (or sell).
  3. Hit the Buy (or Sell) button.

The same sequence applies to limit orders with the exception that you must enter your desired execution price.

The One You Want

While clickbait advertisements tend to receive universal scorn, the dirty little secret is that they represent a guilty pleasure. Therefore, clickbait is here to stay. But beyond the tawdry element, such targeted ads indirectly support the public good by financially bolstering reputable journalism, providing the ultimate catalyst for Outbrain.

About Joshua Enomoto

His distinct writing style of distilling convoluted data into relatable and compelling narratives has earned him recognition among several investment-related publications.