Shares of The Trade Desk (TTD) plummeted 31% on Thursday, marking the largest single-day decline in the company's history.
The dramatic selloff followed fourth-quarter earnings that fell short of Wall Street expectations, shaking investor confidence in the advertising-technology firm.
While adjusted earnings of $0.59 per share slightly beat estimates of $0.57, revenue came in at $741 million—missing the consensus forecast of $758.9 million. This marked the first revenue miss in 33 consecutive quarters, a streak that had long cemented The Trade Desk’s reputation as a consistent outperformer.
Reorganization and Slower Adoption of Kokai Weigh on Growth
CEO Jeff Green acknowledged the company’s struggles, attributing the revenue shortfall to a December reorganization and slower-than-expected adoption of its AI-driven ad-tech platform, Kokai.
“We are disappointed that we fell short of our own expectations in the fourth quarter,” Green said, emphasizing that the restructuring was necessary to position the company for long-term success in key areas like connected TV (CTV), retail media, and supply chain optimization.
Analysts at Oppenheimer noted that The Trade Desk’s rapid expansion to nearly 4,000 employees had introduced complexity, leading to decision-making bottlenecks. They highlighted overlapping teams targeting both ad agencies and advertisers, a challenge the company must address to regain momentum.
For long-term investors, the recent selloff could present an opportunity, provided The Trade Desk successfully navigates its restructuring and reaccelerates growth. But for now, the stock appears to be in a volatile holding pattern as Wall Street reassesses its premium valuation.
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While adjusted earnings of $0.59 per share slightly beat estimates of $0.57, revenue came in at $741 million—missing the consensus forecast of $758.9 million. This marked the first revenue miss in 33 consecutive quarters, a streak that had long cemented The Trade Desk’s reputation as a consistent outperformer.
Reorganization and Slower Adoption of Kokai Weigh on Growth
CEO Jeff Green acknowledged the company’s struggles, attributing the revenue shortfall to a December reorganization and slower-than-expected adoption of its AI-driven ad-tech platform, Kokai.
“We are disappointed that we fell short of our own expectations in the fourth quarter,” Green said, emphasizing that the restructuring was necessary to position the company for long-term success in key areas like connected TV (CTV), retail media, and supply chain optimization.
Analysts at Oppenheimer noted that The Trade Desk’s rapid expansion to nearly 4,000 employees had introduced complexity, leading to decision-making bottlenecks. They highlighted overlapping teams targeting both ad agencies and advertisers, a challenge the company must address to regain momentum.
Wall Street Slashes Price Targets, Questions Premium Valuation
The earnings disappointment prompted swift reactions from analysts. Evercore ISI downgraded the stock from Outperform to In Line, citing concerns over execution missteps, increasing competition, and a shift in revenue growth from "premium" levels (mid-20%) to "sub-premium" (high-teens to low-20%). The firm slashed its price target from $135 to $90.
Guggenheim also lowered its price target to $110 from $150 but maintained a Buy rating, expressing confidence in the long-term opportunity despite short-term turbulence. Citi (C) analysts echoed this sentiment, reducing their target to $108 but noting that the selloff could present a buying opportunity.
The earnings disappointment prompted swift reactions from analysts. Evercore ISI downgraded the stock from Outperform to In Line, citing concerns over execution missteps, increasing competition, and a shift in revenue growth from "premium" levels (mid-20%) to "sub-premium" (high-teens to low-20%). The firm slashed its price target from $135 to $90.
Guggenheim also lowered its price target to $110 from $150 but maintained a Buy rating, expressing confidence in the long-term opportunity despite short-term turbulence. Citi (C) analysts echoed this sentiment, reducing their target to $108 but noting that the selloff could present a buying opportunity.
Looking Ahead: Can The Trade Desk Rebound?
Despite the sharp decline, The Trade Desk remains optimistic about its future. The company has outlined a series of internal changes, including streamlined teams, enhanced resource allocation, and a renewed focus on product agility. Management is also betting on AI advancements, forecasting improvements in ad forecasting and internal efficiency throughout 2025.
However, near-term challenges persist. The Trade Desk’s Q1 revenue guidance of $575 million fell slightly below analyst estimates of $582.1 million, signaling continued deceleration. Meanwhile, competition from Amazon (AMZN) Prime Video, Netflix (NFLX), and other streaming giants is intensifying as these platforms attract more direct brand advertising dollars.
Despite the sharp decline, The Trade Desk remains optimistic about its future. The company has outlined a series of internal changes, including streamlined teams, enhanced resource allocation, and a renewed focus on product agility. Management is also betting on AI advancements, forecasting improvements in ad forecasting and internal efficiency throughout 2025.
However, near-term challenges persist. The Trade Desk’s Q1 revenue guidance of $575 million fell slightly below analyst estimates of $582.1 million, signaling continued deceleration. Meanwhile, competition from Amazon (AMZN) Prime Video, Netflix (NFLX), and other streaming giants is intensifying as these platforms attract more direct brand advertising dollars.
For long-term investors, the recent selloff could present an opportunity, provided The Trade Desk successfully navigates its restructuring and reaccelerates growth. But for now, the stock appears to be in a volatile holding pattern as Wall Street reassesses its premium valuation.
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