The Trade Desk’s stock has fallen 83% from its peak in late 2024 due to slowing revenue growth, with Q3 sales dropping by 18%. Revenue growth for the company is at its weakest point since before the pandemic. Despite management blaming poor execution and macro headwinds, competition seems to be a major source of trouble.
Amazon’s new demand-side platform has gained market share in areas like retail media and Connected TV, thanks to its unmatched customer data and streaming reach. The Trade Desk’s platform is seen as an antidote to “walled gardens,” but Amazon’s partnerships with Netflix, Roku, Spotify, and SiriusXM have expanded its advertising reach.
The company noted weakness among consumer packaged goods and auto advertisers due to tariffs and other macro headwinds. However, the leading digital advertising platforms saw robust growth in Q4. Google advertising reported 13.6% growth, while Meta grew ad revenue by 24.3%. Netflix also touted strong advertising growth. The Trade Desk’s challenges seem reflected in its stock plunge, but a turnaround isn’t guaranteed.
Investors should wait for revenue growth to stabilize before buying the stock, as competition won’t be easy to overcome. With shares looking cheap at a price-to-earnings ratio of 27, it’s essential to consider alternative options. The Motley Fool Stock Advisor team has identified 10 best stocks for investors to buy now, and The Trade Desk wasn’t one of them.
Investors should also note that the stock can still go lower, and shares might not be as cheap as they seem. Before buying stock in The Trade Desk, consider these factors and alternative options.
Source: https://www.nasdaq.com/articles/after-83-plunge-trade-desk-dead-money