Is The Trade Desk Stock Too Cheap to Ignore?
Being an investor in The Trade Desk (NASDAQ: TTD) up until 2025 was a great time. The stock always delivered strong returns, but then its business fell apart. The stock is now down 90% from its all-time high. That’s a huge crash, and the mountain the stock must climb to regain an all-time high is massive.
The question investors must ask now is whether the stock is actually cheap because it sold off so much, or if there is a viable business here. Let’s take a look and see if this stock is too cheap to ignore, or if it’s time to cut bait and leave.
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The Trade Desk has struggled
The Trade Desk operates a buy-side ad platform, which helps place ad buyers’ ads in the best locations. In the beginning, The Trade Desk was one of the best at this and had a massive client base. However, a botched rollout of a new AI-powered platform caused many to leave, and rising competition from advertising services like Amazon (NASDAQ: AMZN) has harmed The Trade Desk’s business. In the second quarter, it grew revenue at a 3% year-over-year pace.
That is a major red flag, as The Trade Desk is obviously struggling to get anything going. Wall Street analysts are also bearish on the future. They expect 2026’s revenue growth to be negative, falling about 5%. Next year, they also expect sales to decline by 5%. The Trade Desk is in a spiral, and it must seriously innovate in order to gain ground back, or it could be at risk of becoming irrelevant.
Is the stock cheap enough to warrant a turnaround investment? I don’t think it matters.
The Trade Desk trades for a very cheap 11 times forward earnings.
TTD P/E Ratio (Forward) data by YCharts. P/E = price-to-earnings.
While that’s incredibly cheap and something that smart investors can’t ignore, if a company is losing market share to competitors and shrinking, I think it’s a stock investors should stay clear of. There are just too many other companies, especially in the AI infrastructure field, that are trading at attractive prices and growing at an incredible rate. Buying these companies is preferable to messing around with a stock that’s shrinking and has a huge turnaround in front of it. The Trade Desk may get it done and deliver solid returns once again, but there will be plenty of time to rotate back into the stock once that happens.
I’d wait for The Trade Desk to post a good quarter for once before buying the stock, but that could take some time. As a result, I think investors are better off looking elsewhere for value.
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Keithen Drury has positions in Amazon and The Trade Desk. The Motley Fool has positions in and recommends Amazon and The Trade Desk. The Motley Fool has a disclosure policy.
Is The Trade Desk Stock Too Cheap to Ignore? was originally published by The Motley Fool