Trade Desk tanks almost 40% on CFO departure, tariff concerns and competition from Amazon

CNBC

4 days ago

Shares of The Trade Desk plummeted almost 40% on Friday and headed for their worst day on record after the ad-tech company announced the departure of its CFO and analysts expressed concerns about rising competition from Amazon.
The Trade Desk, which went public in 2016, suffered its steepest prior drop in February, when the shares fell 33% on a revenue miss. In its second-quarter earnings report late Thursday, the company beat expectations on earnings and revenue, but the results failed to impress investors.
The Trade Desk, which specializes in providing technology to companies that want to target users across the web, said finance chief Laura Schenkein is leaving the job and being replaced by Alex Kayyal, who has been working as a partner at Lightspeed Ventures.
While some analysts were uneasy about the sudden change in the top finance role, the bigger concern is Amazon's growing role in the online ad market, as well as the potential impact of President Donald Trump's tariffs on ad spending.
Amazon has emerged as a significant player in the digital advertising market in recent years, and is now third behind Google and Meta. Last week, Amazon reported a 23% increase in ad revenue for the second quarter to $15.7 billion, which beat estimates.
Amazon's ad business has largely been tied to its own platforms, with brands paying up so they can get discovered on the sprawling marketplace. However, Amazon's demand-side platform (DSP), which allows brands to programmatically place ads across a wider swath of internet properties, is gaining more resonance in the market.
"Amazon is now unlocking access to traditionally exclusive 'premium' ad inventory across the open internet, validating the strength of its DSP and suggesting The Trade Desk's value proposition could erode over time," Wedbush analysts wrote on Friday.
The Wedbush analysts lowered their rating on The Trade Desk to the equivalent of hold from buy, and cited Amazon's recent ad integration with Disney as a sign of the company's aggressiveness.
Executives at The Trade Desk were asked about Amazon on the call, and responded by suggesting that the companies don't really compete, emphasizing that Amazon is conflicted because it will always prioritize its own properties.
"A scaled independent DSP like The Trade Desk becomes essential as we help advertisers buy across everything and that we have to do that without conflict or compromise," CEO Jeff Green said on the call. "It is my understanding that Amazon nearly doubled the supply of Prime Video inventory in the recent months. That creates a number of conflicts."
For the second quarter, The Trade Desk reported a 19% increase in year-over-year revenue to $694 million, topping the $685 million estimate, according to analysts polled by LSEG. Adjusted earnings per share of 41 cents beat estimates by a penny.
Looking to the third quarter, the Trump administration's tariffs were also a theme, as the company forecast revenue of at least $717 million, representing growth of 14% at minimum.
"From a macro standpoint, some of the world's largest brands are absolutely facing pressure and some amount of uncertainty," Green said. "Some have to respond more than others to tariffs. Many are managing inflation worries and the related pricing that comes with that."
With Friday's slump, The Trade Desk shares are now down 53% for the year, while the S&P 500 is up about 9%. The Trade Desk was added to the S&P 500 in June.