Investors Spooked By Trade Desk Comments

Stock (Symbol)

Trade Desk (TTD)

Stock Price


Data is as of
November 16, 2017
Expected to Report
Feb 14
Company Description
The Trade Desk, Inc. is a technology company. The Company provides a self-service platform that enables clients to purchase and manage digital advertising campaigns across various advertising formats, including display, video and social, and on a range of devices, including computers, mobile devices and connected television. Source: Thomson Financial
Sharek’s Take
David SharekThe Trade Desk (TTD) stock is down from $65 to $48 after the company said there is a slowdown in spending among big advertisers, retail in particular. But on the other hand management upped guidance, as it has every qtr since the company went public last year. The Trade Desk is a cloud-based software platform which allows sophisticated advertising executives to manage digital ad campaigns across different spectrums, such as TV or the Internet. Recent new clients include Proctor & Gamble, one of the world’s largest banks, and a couple car manufacturers. Digital advertising is growing 15% a year (source: IDC) and The Trade Desk has had sales grow 126% a year the past three years. Last qtr the company had 50% revenue growth including a 140% spurt in mobile video growth. Mobile represented less than 10% of sales four years ago and now represents 40% of sales. There’s a lot of good things to write about here, but the elephants in the room — Google and Facebook — could squash this company. Thus this investment in TTD is small on my part, and the recent drop has me with my finger on the sell button. On the bright side management has beaten the street and raised guidance every qtr since the stock went public last year, so maybe their cautious statements spooked investors too much. I will continue to hold TTD as it is hitting support here, but this stock might be sold next qtr if it drops again. 
One Year Chart
You can see here the stock is hitting support around $48. WIth that being the case, I think I should hold the stock. And the numbers are great. Last qtr TTD reported 46% profit growth which whipped analysts estimates of 8%. The company beat by 9 cents, but beat by 34 cents the qtr before, so that’s a slowdown in momentum. This stock is nicely priced here with a P/E of 35 compared to an Est. LTG of 35% a year.
Fair Value
My Fair Value is $54 for next year and $71 for 2019. That’s good upside, but this is a small cap stock and it doesn’t have a lot of certainty. It may be best to just stick with Alphabet and Facebook as stocks to own.
Bottom Line
The Trade Desk was a hot stock last qtr and this qtr it’s a cold one. RIght now I don’t have a feel as to whether the stock will rebound next qtr or selloff again. We will have to wait for next qtr’s earnings. That makes the stock a big speculative. For now, with TTD hitting support levels on the chart, I will stick with it another qtr and see what happens. TTD ranks 35th of 35 stocks in the Growth Portfolio Power Rankings.
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