Should You Hold or Sell The Trade Desk Stock Post Q1 Earnings?
So now the question is, should investors think of buying TTD stock at the moment? Let's address this question by evaluating the company's latest quarterly performance and long-term prospects.
TTD reported revenues of $616 million, up 25% year over year and surpassing management's revenue guidance of at least $575 million. Adjusted EBITDA stood at $208 million (34% margin) compared with $162 million (33% margin) in the year-ago quarter. Video, which includes connected TV or CTV, represented a high 40s percentage share of digital spend, while mobile had a mid-30 percent share. Display constituted a low double-digit share, and audio represented around 5%. Customer retention stood at over 95% for the quarter reported.
TTD reported net cash provided by operating activities of $291.4 million, and free cash flow was $230 million. Adjusted earnings per share came in at 33 cents, up 27% from the year-ago quarter.
The Trade Desk price-consensus-eps-surprise-chart | The Trade Desk Quote
The company also noted that its Kokai platform was now being used by two-thirds of the clients, much ahead of schedule. The platform is now delivering on lower funnel KPIs, including 24% lower cost per conversion and 20% lower cost per acquisition, added TTD. 100% adoption by clients is expected to be completed by the year-end. The integration of Koa AI tools was highlighted by management as a 'game changer' for the Kokai platform.
TTD also completed the acquisition of Sincera, a leading digital advertising data company. This buyout will help enhance its programmatic advertising platform by integrating Sincera's actionable insights on data quality. Unified ID 2.0, the company's flagship identity solution and an alternative to third-party cookies, is witnessing increasing adoption. For the second quarter of 2025, revenues are expected to be $682 million.
Increasing macroeconomic uncertainty and escalating trade tensions do not augur well for TTD, as these could squeeze ad budgets. TTD highlighted the impact of the volatile macro backdrop, particularly on the large global brands. If macro headwinds worsen or persist into the second half of 2025, revenue growth may face further pressure due to reduced programmatic demand.
The intensely competitive nature of the digital advertising industry, dominated by industry giants like Alphabet GOOGL and Amazon AMZN, as well as players like Magnite MGNI, continues to put pressure on TTD's market positioning. Growing regulatory scrutiny around data privacy and evolving consumer data practices also threaten to disrupt the established audience-targeting methods.
While CTV remains a strong revenue driver, the market is increasingly fragmented and competitive. Heavy reliance on CTV for growth is a concern, as any adverse impact on this segment could weigh heavily on the overall performance. Moreover, TTD derived 88% of its revenue from North America while only 12% came from international markets. A weak international footprint limits TTD's total addressable market expansion potential.
Increasing costs are likely to weigh on profitability. In the last reported quarter, total operating costs surged 21.4% year over year to $561.6 million. Expenses soared on account of continued investments in boosting platform capabilities, particularly platform operations. Higher costs can prove a drag on margins, especially if the revenue growth does not keep pace.
Given all these factors, analysts remain bearish on the stock, as evident from the downward estimate revision in the past 30 days.
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TTD stock's plunge of 32.5% YTD is steeper than the 13.7% decline of the Internet Services industry and the 1.3% decline of the Zacks S&P 500 composite.
Image Source: Zacks Investment Research
The company has underperformed its digital advertising peers, including Alphabet and Amazon and Magnite. Alphabet and Amazon shares have plunged 16.3% and 4.9%, respectively, in the same time frame. Magnite has gained 1.3% YTD. Magnite is a supply-side platform that helps publishers manage and sell their ad inventory across various formats like streaming, online video, display and audio.
From a valuation perspective, TTD is quite expensive. The stock is trading at a premium with a forward 12-month Price/Sales of 12.99X compared with the industry's 4.75X.
Image Source: Zacks Investment Research
Despite strong first-quarter results, The Trade Desk faces significant headwinds from macroeconomic uncertainty, rising costs, and fierce competition. Its heavy reliance on CTV and North America limits growth flexibility. Steep stock decline YTD, downward estimate revision activity and expensive valuation are other concerns. With a Zacks Rank #4 (Sell), investors would be better off if they offloaded this stock from their portfolios.
You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
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Amazon.com, Inc. (AMZN) : Free Stock Analysis Report
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This article originally published on Zacks Investment Research (zacks.com).
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Yahoo
a day ago
- Yahoo
The Trade Desk, Inc. (NASDAQ:TTD) is largely controlled by institutional shareholders who own 72% of the company
Key Insights Significantly high institutional ownership implies Trade Desk's stock price is sensitive to their trading actions The top 18 shareholders own 50% of the company Using data from analyst forecasts alongside ownership research, one can better assess the future performance of a company This technology could replace computers: discover the 20 stocks are working to make quantum computing a reality. To get a sense of who is truly in control of The Trade Desk, Inc. (NASDAQ:TTD), it is important to understand the ownership structure of the business. And the group that holds the biggest piece of the pie are institutions with 72% ownership. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn). Since institutional have access to huge amounts of capital, their market moves tend to receive a lot of scrutiny by retail or individual investors. As a result, a sizeable amount of institutional money invested in a firm is generally viewed as a positive attribute. In the chart below, we zoom in on the different ownership groups of Trade Desk. See our latest analysis for Trade Desk What Does The Institutional Ownership Tell Us About Trade Desk? Institutional investors commonly compare their own returns to the returns of a commonly followed index. So they generally do consider buying larger companies that are included in the relevant benchmark index. We can see that Trade Desk does have institutional investors; and they hold a good portion of the company's stock. This suggests some credibility amongst professional investors. But we can't rely on that fact alone since institutions make bad investments sometimes, just like everyone does. If multiple institutions change their view on a stock at the same time, you could see the share price drop fast. It's therefore worth looking at Trade Desk's earnings history below. Of course, the future is what really matters. Institutional investors own over 50% of the company, so together than can probably strongly influence board decisions. We note that hedge funds don't have a meaningful investment in Trade Desk. The Vanguard Group, Inc. is currently the largest shareholder, with 9.0% of shares outstanding. With 8.7% and 6.4% of the shares outstanding respectively, Jeffrey Green and Baillie Gifford & Co. are the second and third largest shareholders. Jeffrey Green, who is the second-largest shareholder, also happens to hold the title of Chief Executive Officer. Looking at the shareholder registry, we can see that 50% of the ownership is controlled by the top 18 shareholders, meaning that no single shareholder has a majority interest in the ownership. While studying institutional ownership for a company can add value to your research, it is also a good practice to research analyst recommendations to get a deeper understand of a stock's expected performance. There are a reasonable number of analysts covering the stock, so it might be useful to find out their aggregate view on the future. Insider Ownership Of Trade Desk The definition of an insider can differ slightly between different countries, but members of the board of directors always count. The company management answer to the board and the latter should represent the interests of shareholders. Notably, sometimes top-level managers are on the board themselves. I generally consider insider ownership to be a good thing. However, on some occasions it makes it more difficult for other shareholders to hold the board accountable for decisions. Our most recent data indicates that insiders own some shares in The Trade Desk, Inc.. Insiders own US$3.9b worth of shares (at current prices). Most would say this shows a good alignment of interests between shareholders and the board. Still, it might be worth checking if those insiders have been selling. General Public Ownership With a 19% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Trade Desk. While this size of ownership may not be enough to sway a policy decision in their favour, they can still make a collective impact on company policies. Next Steps: While it is well worth considering the different groups that own a company, there are other factors that are even more important. I always like to check for a history of revenue growth. You can too, by accessing this free chart of historic revenue and earnings in this detailed graph. If you are like me, you may want to think about whether this company will grow or shrink. Luckily, you can check this free report showing analyst forecasts for its future. NB: Figures in this article are calculated using data from the last twelve months, which refer to the 12-month period ending on the last date of the month the financial statement is dated. This may not be consistent with full year annual report figures. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
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The Trade Desk (TTD) Stock Moves -1.01%: What You Should Know
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These stocks reporting earnings next week have a track record of topping analyst estimates
Investors might capture upside and limit risk by focusing on companies reporting earnings next week with a history of beating Wall Street expectations. The first full week of August is another busy one for second-quarter earnings, with 122 companies in the S & P 500 — or nearly a quarter of the benchmark — slated to share results. Disney and McDonald's are among the headliners, with restaurant, travel, pharmaceutical and energy stocks dominating. Second-quarter earnings have been coming in strong so far. Of the 298 companies in the S & P 500 that have already reported, about 82% have exceeded Wall Street analysts' earnings expectations. Nearly 80% have also posted an upside revenue surprise. Stocks can rally if earnings impress analysts. With this in mind, CNBC Pro screened data from Bespoke Investment Group, looking for stocks that are due to report next week that have a history of beating earnings expectations and then rising on the back of those results. To be included in the table below, stocks had to meet the following criteria: Beat earnings expectations at least 75% of the time On average, rise at least 2% on the first trading day after earnings Shopify is one company that could see gains next week, if the past is any guide. The cloud-based e-commerce platform has an 85% earnings beat rate and an average post-earnings gain of 3.3%. Shares of Shopify have gained 11% this year. In July, Needham analyst Scott Berg initiated research coverage of the stock with a buy rating and a $135 price target, implying upside of about 10% from Shopify's Thursday close. "While Shopify is widely considered a generational software company, we believe the company remains in only the mid-cycle of a durable growth opportunity," Berg wrote. The Trade Desk has a history of rising 7.2%, on average, in the next session after it reports, and of beating analysts' earnings expectations 94% of the time. Although the digital advertising stock has slumped 30% this year, it ended July with a 21% gain, helped by its entry into the benchmark S & P 500 index in mid-July. "We view the inclusion as additional confirmation of TTD's very impressive fundamentals and as additional confirmation of the centrality of the Internet Sector, as TTD becomes the 13th 'Net company added to the index," wrote Evercore ISI, which upgraded Trade Desk to an outperform rating in late June. The researcher's target price of $90 implies that shares could add almost 4% from Thursday's close. If past is prologue, building products manufacturer Trex , down 8% this year, could also see a post-earnings lift next week. The company has beaten earnings estimates 79% of the time and has, on average, risen 2.1% after reporting earnings. In July, Baird upgraded shares to an outperform rating from neutral. "We think relatively stable sell-out trends should be positive for sentiment, particularly with relative valuation near multi-year lows," wrote analyst Timothy Wojs. "Material conversion, new products and railing attachment initiatives provide company-specific levers for underlying market outgrowth." In the same note, Wojs raised his price target to $75 per share from $65, implying potential upside of 17% over the next 12 months.
