The Trade Desk (TTD), a leading advertising technology company, has been a standout player in the digital ad space for years. However, its recent stock performance has left investors and analysts buzzing. On Thursday, TTD stock experienced its largest single-day percentage drop in history, plummeting by 31% to close at $84.54. This dramatic decline was primarily driven by fourth-quarter earnings that fell short of Wall Street’s expectations. In this blog post, we’ll break down the key factors behind TTD stock earnings, what analysts are saying, and what the future might hold for this ad tech giant.
What Caused the TTD Stock Drop?
The Trade Desk reported fourth-quarter revenues of 741 million, missing Wall Street’s forecast of 741 million, missing Wall Street’s forecast of 758.9 million. While the company’s adjusted earnings per share (EPS) of 59 cents beat the expected 57 cents, the revenue miss was enough to spook investors. Two main factors contributed to this shortfall:
Slower Adoption of the Kokai Platform: The Trade Desk’s new Kokai platform, designed to revolutionize programmatic advertising, has seen slower-than-expected adoption. This delay impacted the company’s ability to meet revenue targets.
Company-Wide Reorganization: The Trade Desk recently underwent a significant reorganization aimed at streamlining operations and accelerating growth in key areas like connected TV (CTV) and retail media. While this move is expected to pay off in the long run, it created short-term challenges that affected revenue.
Analysts Weigh In on TTD Stock Earnings
Despite the disappointing earnings report, analysts remain cautiously optimistic about The Trade Desk’s future. Here’s what some of the top analysts are saying:
Oppenheimer: Jason Helfstein and his team noted that this was the first time in 33 quarters that The Trade Desk missed revenue expectations. They attributed the miss to the company’s rapid growth and evolving strategies but maintained an “Outperform” rating with a price target of $115.
Guggenheim: Guggenheim analysts reiterated their confidence in The Trade Desk’s long-term growth potential, maintaining a “Buy” rating. However, they lowered their price target from 150to150to110, reflecting the recent challenges.
Citi: Citi analysts view the current stock dip as a buying opportunity. While they reduced their price target from 140 to 140 to 108, they maintained a “Buy” rating, emphasizing the company’s strong fundamentals.
The Trade Desk’s Future
Looking ahead, The Trade Desk has projected first-quarter revenues of at least 575 million, slightly below analysts’ expectations of 575 million, and slightly below analysts’ expectations of 582.1 million. CEO Jeff Green acknowledged the company’s disappointment in falling short of revenue targets but emphasized the strategic importance of the recent reorganization. He highlighted the potential for accelerated growth in key areas like connected TV, retail media, and the Kokai platform.
It’s worth noting that The Trade Desk’s recent struggles contrast sharply with its earlier performance. In the third quarter of 2024, the company reported a 27% increase in revenue, reaching 628 million, 141628 million, and 1410.41, showcasing the company’s ability to deliver strong results.
Is TTD Stock a Buy After the Dip?
For investors, the big question is whether TTD stock is a buy after its recent decline. While the revenue miss and stock drop are concerning, many analysts believe the company’s long-term growth story remains intact. The Trade Desk’s leadership in programmatic advertising, its innovative Kokai platform, and its focus on high-growth areas like CTV and retail media position it well for future success.
However, potential investors should be prepared for volatility. The company’s ongoing reorganization and the slower adoption of Kokai could continue to create short-term challenges.
The Trade Desk’s recent stock earnings report has undoubtedly shaken investor confidence, but it’s important to look beyond the headlines. While the revenue miss and stock drop are significant, analysts remain bullish on the company’s long-term prospects. For those willing to ride out the short-term turbulence, TTD stock could present a compelling buying opportunity.
As always, it’s crucial to conduct thorough research and consider your risk tolerance before making any investment decisions. Keep an eye on The Trade Desk’s upcoming earnings reports and updates on its Kokai platform and reorganization efforts to gauge the company’s trajectory.