The Trade Desk’s Stellar Performance: Strong Growth Ahead
The Trade Desk’s TTD shares have appreciated 79% in the past 12 months, outperforming both the Zacks Computer & Technology sector and the Zacks Internet Services industry. While the broader sector has returned 49.8%, the industry has returned 34.7% over the same timeframe.
The Trade Desk shares are riding on strong top-line growth driven by an expanding clientele. In the first half of 2024, revenues jumped 27% over the year-ago period, fueled by increased spending from both new and existing clients.
TTD’s self-service, cloud-based platform automates ad buying, helping clients—such as advertising agencies and brands—effectively reach fragmented audiences in a rapidly digitizing media landscape. The company benefits from a growing global presence, continuous development of omnichannel ad inventory, and strong adoption of programmatic advertising.
Impressive Outperformance: TTD Stands Out
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These factors are expected to drive further growth. The Trade Desk estimates third-quarter revenues to be at least $618 million, suggesting year-over-year growth of approximately 25%. Adjusted EBITDA is projected to reach roughly $248 million.
Recent technical indicators show a bullish trend for The Trade Desk, as the shares currently trade above both the 50-day and 200-day moving averages, reflecting significant upward momentum.
Positive Signals: TTD Above Key Moving Averages
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Will the time continue to be favorable for TTD? Let’s explore.
Upward Estimate Revisions Show Confidence in TTD
The Zacks Consensus Estimate for TTD’s 2024 revenues is currently at $2.45 billion, indicating a year-over-year growth of 25.78%. For earnings, the consensus stands at $1.63 per share, an increase of a penny over the last 60 days, suggesting a 29.37% growth compared to 2023.
Third-quarter 2024 revenue estimates are pegged at $619.9 million, reflecting year-over-year growth of 25.67%. The earnings consensus for this quarter remains steady at 40 cents per share, which indicates a 21.21% increase year over year.
The Trade Desk Price and Consensus
The Trade Desk price-consensus-chart | The Trade Desk Quote
Emerging Demand for CTV Boosts TTD’s Revenue
In the short term, The Trade Desk is poised to gain from robust spending in the CTV and retail media sectors. CTV is currently its fastest-growing area, reaching over 90 million households and more than 120 million devices.
In the second quarter of 2024, video—including CTV—accounted for 40% of TTD’s business. This segment continues to gain prominence in the company’s portfolio, with mobile making up around 30% of reported spending.
Initiatives like UID2, OpenPass, and Kokai support the growing demand for TTD’s advertising services. As advertisers seek efficiency and measurable outcomes, TTD is increasing its share in CTV and retail media.
The company stands to benefit from the escalating demand for digital and programmatic advertising, with the total addressable advertising market nearing $1 trillion, presenting a substantial opportunity for growth.
TTD has established a broad clientele within the media industry. Its access to platforms such as NBCU, Netflix (NFLX), and Roku (ROKU) contributes to its premium inventory and supports growth.
The early adoption of UID2 has been significant. For instance, Sirius XM Media’s Pandora Media was the first audio publisher to implement UID2, while LG Ad Solutions has utilized UID2 to enhance privacy-aware advertising across its vast network.
An expanding roster of partners—including Netflix, Disney, Comcast, Walmart, Amazon, Fox, VerticalScope Holdings, foodpanda, and LG Electronics—has been a crucial driver for TTD’s growth.
Additionally, TTD’s international business is growing rapidly, outpacing North America for the sixth consecutive quarter, with CTV leading growth in both EMEA and Asia Pacific regions.
TTD Stock Faces Valuation Concerns
Currently holding a Value Score of F suggests that TTD may be experiencing a stretched valuation. The stock is trading at a high forward 12-month Price/Sales ratio of 20.23X, compared to the industry average of 5.8X.
P/S Ratio (F12M)
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Conclusion: A Positive Outlook Despite Challenges
The Trade Desk’s strong business model and expanding partnerships are encouraging signs. Even with a potentially inflated valuation, TTD shares are projected to maintain their upward trajectory, driven by these contributing factors.
Thus, current shareholders might anticipate rewarding prospects in the company’s growth over the long term.
Currently, The Trade Desk carries a Zacks Rank #3 (Hold), indicating that it may be wise for investors to wait for a more favorable entry point in the market. For more insights, check out the complete list of today’s Zacks #1 Rank (Strong Buy) stocks.
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The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.
