Millennial Media (MM) reported a disastrous first quarter last week. The stock fell about 40% on the news, as the company missed its earnings and also pulled its full-year guidance and cut second-quarter guidance. The mobile ad exchange company saw its shares dive as a result.
It was only the second earnings call for new CEO Michael Barrett. He came most recently from a stint at Yahoo! (YHOO) where he was the Chief Revenue Officer under former CEO Ross Levinsohn.
You could tell on the call that Barrett was embarrassed that he had to cut guidance so quickly after taking the reins. On his first call, which was only 14 days into the job for him, he had provided full-year guidance that suggested the company would see 20% growth this year. Now, one quarter later, he pulled that guidance after several large "performance advertisers" had drastically cut back their spending in the first quarter, leading to the poor results.
But the stock is up 10% this morning because of two things.
First, Barrett announced that he'd bought $1 million worth of MM stock a few days ago. This is a shot in the arm for the stock -- an obvious signal of Barrett's confidence in the company and what he's trying to build. He's not the only ad tech executive that has had to do this in the past few weeks. Last week, AOL (AOL) also released its first-quarter results, which were also surprisingly light to the Street. AOL's stock dropped more than 20% on the news. AOL CEO Tim Armstrong stepped up and bought about $1 million worth of stock in AOL. It similarly seemed to steady investor nerves, and they bid the stock back up from a low of $32 to $38 before AOL slumped again.
The second bit of news helping MM's stock this morning comes from another ad exchange company, the Rubicon Project (RUBI).
Rubicon is up more than 20% this morning on its first earnings report last night; it debuted earlier this year. Ad tech initial public offerings have been treacherous. Rocket Fuel (FUEL) came out late last year and flew up to $70 in the weeks after the IPO. It did a secondary up there and all seemed fine. But the bear market to tech stocks in the past few months and a recent bad earnings report took the stock down to $20 a few days ago.
People were expecting similar bad results out of the gate from Rubicon and its stock is still down 30% for the past month (even with today's 23% gain). The report from Rubicon was strong on all fronts, and people are breathing a sigh of relief in ad tech today.
Will it continue, and will Millennial Media follow through? It remains to be seen. But today people are happy the Michael Barrett is putting his money where his mouth is.