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TTD Rises 79% in a Year: Is it Too Late to Jump Into the Stock?
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The Trade Desk’s (TTD - Free Report) shares have appreciated 79% in the past 12 months, outperforming both the Zacks Computer & Technology sector and the Zacks Internet Services industry. While the broader sector has returned 49.8%, the industry has returned 34.7% over the same timeframe.
The Trade Desk shares are riding on strong top-line growth driven by an expanding clientele. In the first half of 2024, revenues jumped 27% over the year-ago period, driven by higher spending from new and existing clients.
TTD’s self-service cloud-based platform offers automation in ad buying that helps its clients (advertising agencies, advertisers and other service providers for agencies or advertisers) easily penetrate an increasingly fragmented audience amid ongoing digitization of media. It is benefiting from an expanding global footprint, continuing development of the omnichannel ad inventory and strong adoption of programmatic advertising.
TTD Outperforms Sector in a Year
Image Source: Zacks Investment Research
These factors are expected to drive top-line growth. The Trade Desk estimates third-quarter revenues to be at least $618 million, suggesting year-over-year growth of approximately 25%. Adjusted EBITDA is expected to be roughly $248 million.
The technical indicator is bullish for The Trade Desk as the shares trade above the 50-day and 200-day moving averages, which indicates robust upward momentum.
TTD Shares Trade Above 50-Day & 200-Day SMA
Image Source: Zacks Investment Research
Will the momentum continue for TTD? Let’s dig deep to find out.
TTD’s Estimate Revisions Show Upward Movement
The Zacks Consensus Estimate for TTD’s 2024 revenues is pegged at $2.45 billion, indicating year-over-year growth of 25.78%. The consensus mark for earnings is pegged at $1.63 per share, up by a penny over the past 60 days and indicating 29.37% growth over 2023.
The Zacks Consensus Estimate for third-quarter 2024 revenues is pegged at $619.9 million, indicating year-over-year growth of 25.67%. The consensus mark for earnings is pegged at 40 cents per share, unchanged over the past 60 days and suggesting 21.21% growth year over year.
In the near term, The Trade Desk is expected to benefit from strong spending in the CTV and retail media domains. CTV is its fastest-growing channel, reaching more than 90 million households and more than 120 million CTV devices.
In the second quarter of 2024, video, which includes CTV, represented a high 40% share of TTD’s business. It continued to grow as a percentage of The Trade Desk’s business mix. Mobile represents a mid-30% share of spend in the reported quarter.
TTD’s initiatives, namely UID2, OpenPass and Kokai, benefit from increased demand for its advertising services. It is gaining market share in CTV and Retail Media as advertisers look for greater efficiency and measurable results.
TTD benefits from the growing demand for digital and programmatic advertisement. The total advertising addressable market is trending toward $1 trillion, which presents a significant growth opportunity for The Trade Desk.
The Trade Desk is gaining clientele in the media industry. Growing premium inventory thanks to access to NBCU, Netflix (NFLX - Free Report) and Roku (ROKU - Free Report) platforms has been a key catalyst.
The adoption of UID2 is a major driver. Sirius XM Media’s Pandora Media became the first audio publisher to adopt UID2. LG Ad Solutions integrated UID2 to enable advertisers to leverage their first-party data across LG’s extensive audience network in a privacy-conscious manner.
An expanding partner base that includes Netflix, Disney (DIS - Free Report) , Comcast, Walmart, Amazon, Fox, VerticalScope Holdings, foodpanda and LG Electronics has been a key catalyst.
Expanding international business bodes well for TTD’s prospects. International growth has outpaced North America for the sixth quarter in a row, with CTV driving growth across both EMEA and Asia Pacific.
TTD Stock is Overvalued
The Value Score of F suggests a stretched valuation at this moment.
TTD stock is trading at a premium with a forward 12-month Price/Sales of 20.23X compared with the industry’s 5.8X.
P/S Ratio (F12M)
Image Source: Zacks Investment Research
Conclusion
The Trade Desk’s strong portfolio and expanding partner base are positive. Despite a stretched valuation, TTD shares are expected to continue this upward trajectory, driven by these factors.
Hence, investors who already own the stock might expect the company’s growth prospects to be rewarding over a longer term.
Image: Bigstock
TTD Rises 79% in a Year: Is it Too Late to Jump Into the Stock?
The Trade Desk’s (TTD - Free Report) shares have appreciated 79% in the past 12 months, outperforming both the Zacks Computer & Technology sector and the Zacks Internet Services industry. While the broader sector has returned 49.8%, the industry has returned 34.7% over the same timeframe.
The Trade Desk shares are riding on strong top-line growth driven by an expanding clientele. In the first half of 2024, revenues jumped 27% over the year-ago period, driven by higher spending from new and existing clients.
TTD’s self-service cloud-based platform offers automation in ad buying that helps its clients (advertising agencies, advertisers and other service providers for agencies or advertisers) easily penetrate an increasingly fragmented audience amid ongoing digitization of media. It is benefiting from an expanding global footprint, continuing development of the omnichannel ad inventory and strong adoption of programmatic advertising.
TTD Outperforms Sector in a Year
Image Source: Zacks Investment Research
These factors are expected to drive top-line growth. The Trade Desk estimates third-quarter revenues to be at least $618 million, suggesting year-over-year growth of approximately 25%. Adjusted EBITDA is expected to be roughly $248 million.
The technical indicator is bullish for The Trade Desk as the shares trade above the 50-day and 200-day moving averages, which indicates robust upward momentum.
TTD Shares Trade Above 50-Day & 200-Day SMA
Image Source: Zacks Investment Research
Will the momentum continue for TTD? Let’s dig deep to find out.
TTD’s Estimate Revisions Show Upward Movement
The Zacks Consensus Estimate for TTD’s 2024 revenues is pegged at $2.45 billion, indicating year-over-year growth of 25.78%. The consensus mark for earnings is pegged at $1.63 per share, up by a penny over the past 60 days and indicating 29.37% growth over 2023.
The Zacks Consensus Estimate for third-quarter 2024 revenues is pegged at $619.9 million, indicating year-over-year growth of 25.67%. The consensus mark for earnings is pegged at 40 cents per share, unchanged over the past 60 days and suggesting 21.21% growth year over year.
The Trade Desk Price and Consensus
The Trade Desk price-consensus-chart | The Trade Desk Quote
Strong CTV Demand to Aid TTD’s Top-Line Growth
In the near term, The Trade Desk is expected to benefit from strong spending in the CTV and retail media domains. CTV is its fastest-growing channel, reaching more than 90 million households and more than 120 million CTV devices.
In the second quarter of 2024, video, which includes CTV, represented a high 40% share of TTD’s business. It continued to grow as a percentage of The Trade Desk’s business mix. Mobile represents a mid-30% share of spend in the reported quarter.
TTD’s initiatives, namely UID2, OpenPass and Kokai, benefit from increased demand for its advertising services. It is gaining market share in CTV and Retail Media as advertisers look for greater efficiency and measurable results.
TTD benefits from the growing demand for digital and programmatic advertisement. The total advertising addressable market is trending toward $1 trillion, which presents a significant growth opportunity for The Trade Desk.
The Trade Desk is gaining clientele in the media industry. Growing premium inventory thanks to access to NBCU, Netflix (NFLX - Free Report) and Roku (ROKU - Free Report) platforms has been a key catalyst.
The adoption of UID2 is a major driver. Sirius XM Media’s Pandora Media became the first audio publisher to adopt UID2. LG Ad Solutions integrated UID2 to enable advertisers to leverage their first-party data across LG’s extensive audience network in a privacy-conscious manner.
An expanding partner base that includes Netflix, Disney (DIS - Free Report) , Comcast, Walmart, Amazon, Fox, VerticalScope Holdings, foodpanda and LG Electronics has been a key catalyst.
Expanding international business bodes well for TTD’s prospects. International growth has outpaced North America for the sixth quarter in a row, with CTV driving growth across both EMEA and Asia Pacific.
TTD Stock is Overvalued
The Value Score of F suggests a stretched valuation at this moment.
TTD stock is trading at a premium with a forward 12-month Price/Sales of 20.23X compared with the industry’s 5.8X.
P/S Ratio (F12M)
Image Source: Zacks Investment Research
Conclusion
The Trade Desk’s strong portfolio and expanding partner base are positive. Despite a stretched valuation, TTD shares are expected to continue this upward trajectory, driven by these factors.
Hence, investors who already own the stock might expect the company’s growth prospects to be rewarding over a longer term.
The Trade Desk currently carries a Zacks Rank #3 (Hold), suggesting that it may be wise to wait for a more favorable entry point in the stock. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.