The Trade Desk’s stock surged 14% in extended trading on July 14 following its inclusion in the S&P 500 index. This move signifies validation of the company’s strong fundamentals in programmatic advertising, with a market capitalization poised for increased stability due to mechanical demand from index funds and ETFs.
Over the past year, The Trade Desk reported revenue growth of 25.1%, totaling $2.6 billion, with $616 million generated in the latest quarter. Its operating income stands at $453 million, showcasing a 17.6% operating margin, while net income reached $412 million, producing a net margin of 16.0%. The company maintains a debt-to-equity ratio of 0.9% and cash and equivalents amounting to $1.7 billion, reflecting strong financial health.
Despite these positives, The Trade Desk’s stock is traded at high valuation premiums, including a price-to-earnings ratio of 92.3, compared to the S&P 500’s 26.9. It has shown extreme sensitivity to market conditions, with substantial declines during periods of economic stress. Investors should be cautious, recognizing the potential for volatility, while noting the underlying potential for sustained growth in the programmatic advertising sector.