Nasdaq-100 Sees Drops: Trade Desk and Tesla Hit Hardest
February 2025 was not a standout month for the Nasdaq-100. The index fell by nearly 3%, with two of its components experiencing significant declines. As earnings reports surfaced alongside concerns, these stocks lost a noticeable portion of their value.
Investors are now faced with a crucial question: Is this decline a sign of a longer-term downturn, or can these stocks recover? Let’s explore the situation further.
Top Underperformers in February
The largest decline came from The Trade Desk (NASDAQ: TTD), which significantly missed revenue expectations. With a price-to-earnings (P/E) ratio exceeding 150, the company’s stock plunged almost 41% following its earnings report.
Following closely behind, Tesla (NASDAQ: TSLA) suffered a loss of nearly 28% for the month.
Data by YCharts.
Tesla’s earnings report released on January 29 highlighted a revenue decline even amid increasing sales volumes, which unsettled investors. Additionally, concerns arose regarding a drop in international sales and potential distractions for CEO Elon Musk, including his involvement with the Department of Government Efficiency and other personal matters.
So, what lies ahead for both The Trade Desk and Tesla? The declines persisted into March, with both stocks continuing to drop.
The high valuation of The Trade Desk had already weighed heavily on its stock before the earnings miss. Fortunately for investors, its P/E ratio has decreased to 71, potentially alleviating some valuation concerns.
Tesla began February with a P/E ratio just under 200, but perceptions shifted negatively throughout the month. Now with a P/E ratio at 114, Musk may need to push for significant advancements in AI technology or boost vehicle sales to reassure investors.
Despite the current challenges, both companies remain leaders in their industries. If execution improves, investors might view this as a valuable buying opportunity.
Investing Considerations for The Trade Desk
Those considering an investment in The Trade Desk should keep the following in mind:
The Motley Fool’s Stock Advisor analyst team identified the 10 best stocks currently for investors, and The Trade Desk was not among them. The selected stocks show potential for substantial returns in the coming years.
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*Stock Advisor returns as of March 18, 2025
Will Healy holds shares in The Trade Desk. The Motley Fool recommends both Tesla and The Trade Desk. The Motley Fool’s disclosure policy is available for review.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
