Despite the current course correction, the growth potential in the digital advertising market remains intact (Photo: Freepik, User11878095)
The Trade Desk is considered the market leader in the programmatic advertising industry. The Trade Desk is particularly well -known through its platform, which enables customers to efficiently manage and control advertising efficiently. With the omnichannel approach, target groups can be achieved via various channels such as connected TV, online videos, audio or mobile.
With this approach could The Trade Desk Since the IPO in 2019 alone, sales increased by 250 percent. However, the recent results sent the share, which is known for volatility, in a downward trend. The current course of the course of 65 percent is unique even for the volatile The-Trade desk share. Is this a discount or a trap?
Sobering quarterly figures began for the descent
The course implosion started with the result report in mid -February 2025. The results and sales forecast for the following quarter were disappointing for investors. Instead of sales of $ 756 million, The Trade Desk only achieved $ 741 million.
This result was too low for a highly valued company (then price sales ratio 17), which meant 22.3 percent sales growth. The Trade Desk is known for growth rates of 25 to 30 percent. The view in turn amounts to only 17 percent sales growth.
The causes are in the changeover to a new AI platform, which lasted longer than expected. In addition, a major restructuring took place in December, which burdened the result. However, the CEO Jeff Green emphasizes that the opportunities in the digital advertising market are unchanged. In 2024, The Trade Desk processed record advertising expenditure of $ 12 billion. Customer loyalty is still over 95 percent.
Just one of many tech shares or leaders?
The Trade Desk is one of the few young technology companies that, in addition to outstanding financial development, both in terms of sales and cash flow, also have a business model that significantly differentiates them from competitors.
The diverse open web inventory (such as sports streaming, premium websites, podcasts, music streaming) underlines the leading position of the company. Particularly noteworthy is the growth segment of Connected TV advertising, which operates transparently, with targeted incentives and first party data.
A strategic growth driver was the introduction of Ventura, the new streaming TV operating system, which is scheduled to start in the first half of 2025. This could help the Trade Desk to make a decisive market position in streaming TV advertising and expand the sales basis in the long term.
Small acquisitions such as recently the acquisition of the analysis platform Sincera also help to evaluate advertising data even more efficiently. The Trade Desk acts with Connected TV in a market that is supposed to grow in double digits annually.
Advantage over alphabet and meta
The Trade Desk has the advantage compared to many competitors in the advertising market – such as Alphabet or Meta – that it works as an independent platform and is not dependent on a closed ecosystem. This enables The Trade Desk to work with a variety of customers and to spread risks.
Customers benefit from efficient and cross -platform access, while Meta and Alphabet prefer their own channels and restrict data.
The transparency also strengthens confidence in the platform with real-time bidder ability. The Trade Desk is also a small player compared to the megacaps. Advertising revenues of $ 12 billion are compared to advertising revenues of 160 billion (META) and 265 billion (alphabet). The totally addressable market (TAM) amounts to a trillion US dollar.
Financially healthy growth company
The Trade Desk was always able to grow sustainably in a competitive and volatile market environment. The bar stock and short-term investments amount to $ 1.3 billion with a gross margin of 80 percent and a free cash flow margin of 27 percent. Even after the stock-based remuneration is deducted, the free cash flow margin is positive.
This solid financial basis and the high liquidity make it possible to remain flexible for further strategic acquisitions and investments. However, the market currently does not want to pay more than a price sales ratio of 8 for the double-digit and healthy growing company.
Investors who are enthusiastic about technology stocks and value quality features can rely on The Trade Desk as the successor to META and alphabet on the analysis and observation list.
Disclaimer:
No investment advice. No call to buy or sell securities.