Stock (Symbol)

Trade Desk (TTD)

Stock Price

$51

Sector

Technology

Data is as of

May 8, 2018

Expected to Report

May 10

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

The Trade Desk (TTD) 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. Digital advertising is growing 15% a year (source: IDC) and The Trade Desk is a small but growing player in the field. TTD has been growing great, but last qtr management stated it will spend an additional $15 million to $20 million on investments so thee company can grow as fast as it possibly can. Which means sacrifice profits to grow revenues. When the dust settled, 2018 profit estimates increased from $1.55 to $1.69 but next qtr’s estimate declined from $0.16 to $0.10. TTD is expected to have negative profit growth the next 2 qtrs, but has whipped estimates every qtr since the stock went public. I am a fan of this stock — but the elephants in the room — Google and Facebook — could squash this company. Thus this investment in TTD is small on my part. Analysts seem to like the stock, but I’m cautious as profits are expected to climb only 6% this year. TTD reports earnings after the bell today, and the stock’s reaction to the report will factor into my decision to hold or sell the stock from the Growth Portfolio.

One Year Chart

This stock tried breaking out last year (over $60) then got slammed after an earnings report failed to impress investors. The following qtr, the stock gapped up after earnings — a positive sign –but in the months since has given back most of that move. Last qtr’s results were great with 64% profit growth (which beat estimates of 30%) as sales increased a solid 42%. Qtrly profit Estimates are for -44%, -29%, 29% and 41% profit growth the next 4 qtrs with the next 2 qtrs being reduced from the additional spend. The Est. LTG just declined from 35% to 25% a year which isn’t good.

Fair Value

I’m taking my Fair Valie P/E from 30 to 25. That makes the stock overvalued in my eyes. But TTD has beaten the street every qtr since it went public, so these estimates could grow in the coming year.

Bottom Line

The Trade Desk has gone from bring a hot stock to a cold one then hot and now cold. Still, along the way TTD has delivered strong results while beating the street. Analysts like the company and its potential, but I’m a believer in profit growth and right now growth is expected to be negative for the next 2 qtrs. The Trade Desk reports earnings later today and afterwards I might have more clarity. TTD ranks 36th of 39 stocks in the Growth Portfolio Power Rankings.