Trade Desk Fails to Meet Expectations Amidst Digital Growth

The Trade Desk struggles with a 52.9% stock loss in 2024 amidst slower platform adoption and market pressures. However, it reports strong digital spending growth, signaling potential recovery. Investors are advised to hold for now.

Date: 20-03-2025

AI Rating: 5

The Trade Desk's stock performance has significantly lagged behind both its sector and industry, reporting a dramatic 52.9% drop year-to-date compared to a 10% decline in the Computer & Technology sector and a 13.8% decrease in the Internet Services industry. This underperformance can largely be attributed to the sluggish adoption of its new platform, Kokai, along with a complex reorganization.

Despite these challenges, there are positive indicators. TTD reported record-breaking spending of over $12 billion in Q4 2024, highlighting sustained growth in advertiser demand. This is coupled with strong growth in the Connected TV (CTV) sector, aided by the implementation of UID2 for privacy-centric ad targeting and data management.

Revenue Growth: TTD expects to generate at least $575 million in revenues for Q1 2025, with the Zacks Consensus Estimate set at $576.13 million, marking a year-over-year increase of 17.28%. This reflects a positive outlook for revenue growth moving forward.

Earnings Per Share (EPS): The estimate for first-quarter earnings stands at 26 cents per share, which has not changed over the last month. This stable EPS indicates that despite the company’s challenges, earnings have the potential to meet expectations in the near term.

The competitive landscape remains a concern as TTD faces substantial pressure from giants like Google and Amazon, limiting its market positioning. Moreover, the stock is currently trading at a premium with a forward Price/Sales ratio of 8.79, compared to the industry average of 4.61.

In conclusion, while The Trade Desk grapples with significant challenges, including high competition and macroeconomic uncertainty, it displays promising growth in revenues and maintainable earnings. Investors are advised to adopt a cautious approach, refraining from purchasing until a more favorable entry point emerges.

Stocks: TTD AMZN GOOGL ROKU