The Trade Desk (NASDAQ:TTD), a company that sells advertising technology that helps marketers reach targeted audiences across publishers and devices, has seen its stock price rally by about 16% over the last week (five trading days). This compares to the S&P 500, which has remained roughly flat over the same period. The recent rally comes as the company posted stronger than expected results for Q3 2021, with revenue rising by 39% year-over-year to $301 million with adjusted EPS rising about 38% to $0.18. Moreover, the outlook for Q4 2021 was also better than expected, with the company noting that sales could grow to at least $388 million, translating into a 21% plus year-over-year growth. With the strong results and outlook, investors are likely increasingly confident that the company will be able to navigate the two big headwinds ad-tech players have been facing, namely Apple’s move to prevent advertisers from tracking iPhone users without their consent and Google’s plans to phase out ad-tracking cookies from its Chrome browser.
So is TTD stock likely to rise further in the coming weeks and months or is a correction looking more likely? Per the Trefis machine learning engine which analyzes historical stock price movements, TTD stock has a 64% chance of a rise over the next month (21 trading days). See our analysis The Trade Desk Stock Chance of Rise for more details.
Five Days: TTD 16%, vs. S&P 500 -0.2%; Outperformed market
(5% event probability)
- The Trade Desk stock rose 16% over a five-day trading period ending 11/10/2021, compared to the broader market (S&P500) which declined -0.2% over the same period.
- A change of 16% or more over five trading days has a 5% event probability, which has occurred 67 times out of 1289 in the last five years.
Ten Days: TTD 21%, vs. S&P 500 2.1%; Outperformed market
(9% event probability)
- The Trade Desk stock rose 21% over the last ten trading days (two weeks), compared to the broader market (S&P500) which rose by 2.1%.
- A change of 21% or more over ten trading days has a 9% event probability, which has occurred 120 times out of 1284 in the last five years.
Twenty-One Days: TTD 22%, vs. S&P 500 6.9%; Outperformed market
(20% event probability)
- The Trade Desk stock rose 22% over the last twenty-one trading days (about one month), compared to the broader market (S&P500) which rose by 6.9%.
- A change of 22% or more over twenty-one trading days has a 20% event probability, which has occurred 249 times out of 1273 in the last five years.
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[7/18/2021] What’s Happening With The Trade Desk Stock?
The Trade Desk (NASDAQ:TTD), a company that sells advertising technology that helps marketers reach targeted audiences across publishers and devices, has seen its stock price decline by about 9% over the last week to about $79 per share. The decline comes despite the company’s stronger than expected Q2 2021 earnings and Q3 outlook, as investors likely booked some profit in the stock, which remains up by about 60% from its May lows of under $50 per share. So, is The Trade Desk stock poised to decline further or is a rally looking likely? Based on the Trefis machine learning model, which analyzes multiple years of historical stock price data, The Trade Desk stock has a 67% chance of a rise over the next month (21 trading days) after declining by 9% over the last week. See our analysis TTD Stock Chances Of Rise for more details.
Is The Trade Desk stock good value at current levels? Although the stock doesn’t exactly come cheap trading at about 33x projected 2021 revenues, there are a couple of factors that still make the stock worth a look. The digital advertising industry has gained a lot of traction, as businesses looking to cash in on the post-Covid reopening increasingly target customers, who’ve been spending more time online, via digital advertising. Over Q2, The Trade Desk’s revenue stood at $280 million, roughly double last year’s number and up by about 75% versus Q2 2019. Revenue growth is likely to come at almost 40% this year and about 30% next year per consensus estimates, and the growth is likely to remain strong in the long run as well given the secular shift to online advertising. The Trade Desk should stand to benefit as the market expands given its position as a demand-side-only platform, with no potential for conflicts of interest unlike larger rivals such as Google and Facebook, its ability to target users across various devices and formats, and its strength in the connected TV space. Margins have also been trending higher. Adjusted EBITDA margins stood at about 42% in Q2 2021, up from around 36% in Q2 2019, prior to the pandemic, and this should help drive profitability as revenues scale up.
[5/11/2021] Trade Desk Stock Slumps Post Q1, As Roku, Facebook Set The Bar Too High.
The Trade Desk (NASDAQ:TTD), a company that sells advertising technology that helps marketers reach targeted audiences across publishers and devices, saw its stock plummet by about -25% in Monday’s trading following its Q1 2021 earnings report, which wasn’t as strong as investors expected. The company’s announcement of a 10-for-1 stock split – which is typically viewed as positive by shareholders – didn’t help stem the decline. Although revenues came in at about $220 million, up 37% year-over-year and ahead of consensus estimates of about $217 million, investors were apparently looking for a larger beat considering the blowout results posted by other digital ad businesses such as Roku, Facebook, and Alphabet. For perspective, Facebook, a company that is about 100x as large as The Trade Desk in terms of revenue, grew revenue by 48% last quarter. So is The Trade Desk stock poised to recover or is a further decline looking likely? Based on our machine learning model, which analyzes multiple years of historical stock price data, The Trade Desk stock has a strong chance of a rise over the next month (21 trading days) after declining by about 30% over the last five trading days. See our analysis TTD Stock Chances Of Rise for more details.
So what’s the longer-term outlook for The Trade Desk? TTD stock has already been under pressure over the last few months (it remains down 40% year-to-date), as Google’s recent decision to not use technologies that track people individually across the Internet has been weighing on the ad tech sector to an extent (see our updates below). However, the fundamental picture for the company hasn’t changed too much, with eMarketer estimating that total digital ad spending will rise to about $526 billion by 2024, from levels of around $333 billion in 2020. The Trade Desk should stand to benefit considerably given its position as a demand-side-only platform, with no potential for conflicts of interest unlike larger rivals such as Google and Facebook, its ability to target users across various devices and formats, and its strength in the connected TV space. Although the stock still trades at a relatively lofty 85x forward earnings, with revenue growth projected at around 30% or more over the next two years, the company should grow into its valuation.
[3/30/2021]
The stock price for The Trade Desk (NASDAQ:TTD), an ad technology player that helps companies buy digital ads across publishers, has declined by close to 24% over the last month and is down by about 17% over the last week (five trading days). In comparison, the S&P 500 was up by about 1% over the same period. While there haven’t been too many developments relating to the company recently, high-growth tech stocks, in general, have had a mixed week and this is likely impacting the company, as well. So is The Trade Desk stock likely to decline further or are gains in the cards? According to the Trefis Machine Learning Engine, which analyzes several years of price data, TTD Stock has a strong chance of a rise over the next month after declining by about 17% in the last five days. See our dashboard TTD Stock Chances Of Rise For More Details.
So what’s the longer-term outlook for The Trade Desk stock? The company’s addressable market is growing fast, with eMarketer estimating that total digital ad spending will rise to about $526 billion by 2024, from levels of around $333 billion in 2020. The Trade Desk should stand to benefit given its position as a demand-side-only platform, with no potential for conflicts of interest unlike larger rivals such as Google and Facebook, and its ability to target users across various devices and formats. That said, there are risks. Google’s recent decision to not use technologies that track people individually across the Internet is weighing on the ad tech sector to a certain extent (see our update below). Moreover, the Trade Desk’s stock trades at a relatively high 110x projected earnings, which makes it look somewhat expensive, compared to the 56x multiples seen in 2018.
[3/9/2021] Is Trade Desk Stock A Buy?
The stock price of The Trade Desk (NASDAQ:TTD), an ad technology player that helps companies buy digital ads across publishers, has rallied by over 3.5x from the lows of March 2020 when the broader markets made a bottom due to the spread of Covid-19. This compares with a roughly 70% rise for the S&P 500 over the same period. The Trade Desk stock outperformed significantly as it gained share in the digital advertising market, particularly in areas such as streaming TV which grew significantly through the pandemic. However, we think that the stock, which is also up by about 14x since the end of 2017, looks somewhat overvalued at current levels as we discuss below.
Let’s take a look at the company’s performance over the last few years for a sense of how the company has been faring and what has driven its stock price gains. Revenues rose at an annual rate of about 32% between 2018 and 2020, rising from around $477 million in 2018 to about $836 billion in 2020, driven by higher spending on the company’s platform by its existing clients and the addition of new clients, as marketers continued to shift their ad budgets to digital advertising. The company’s net margins also improved from 18.5% to 29%, driven by a higher revenue base and the recognition of benefits associated with stock-based compensation. The company’s reported EPS grew from about $2.08 per share in 2018 to about $5.24 per share in 2020. However, The Tade Desk’s P/E multiple has jumped from levels of about 56x in 2018 to about 122x currently, as investors doubled down on asset-light Internet companies that saw growing revenues through Covid-19. Our dashboard What Has Driven The Trade Desk Stock Over The Last 3 Years?, has the underlying numbers.
The Trade Desk’s Outlook Is Solid, But Valuation Looks Rich
The global digital ad market is growing fast as ad dollars shift away from traditional media with eMarketer estimating that total digital ad spending will rise to about $526 billion by 2024, from levels of around $333 billion in 2020. The Trade Desk, being a demand-side ad platform that enables businesses and ad agencies to buy advertising and target audiences across various devices and formats, should stand to benefit as the market expands. Moreover, unlike rivals such as Google and Facebook, the company does not own its own content platforms or ad inventory and it works only with ad buyers. This reduces the potential for conflicts of interest and has given the company a reputation for transparency in the relatively complex ad market. The Trade Desk has been gaining market share, with its business growing faster than larger rival Google, driven in particular by gains in areas such as streaming video and connected TVs. Over Q4 2020, the company’s connected TV business doubled year-over-year.
However, despite the solid growth, there are a couple of reasons to remain cautious on the stock. Firstly, Google recently updated its privacy plans promising to not use technologies that track people individually across the Internet. While Google previously said that it would do away with third-party cookies – which are used to track users across websites – on its market-leading Chrome Browser, it now says that it does not plan to replace this with new technology. Although The Trade Desk has developed an alternative solution that creates identifiers for users based on their email addresses, Google’s decision could have broad repercussions for companies that track people individually. Trade Desk stock actually declined by over 20% following this news, implying that investors do see this as a meaningful threat.
Secondly, The Trade Desk’s stock also looks pricey versus historical levels. At the current stock price of $650 per share, the stock is valued at about 122x trailing earnings and at about 118x based on the forward consensus earnings estimate of $5.50 per share. This is considerably higher than the multiple of 56x in 2018 and 107x seen in 2019. Although the company’s growth is set to pick up this year, the high valuation, coupled with the current changes in ad tracking space makes the stock appear vulnerable to further downside risk.
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