Will the Trade Desk 10x Your Money?
The Trade Desk Up 1,800% Since IPO
A quick look at The Trade Desk’s financial history shows extraordinary growth. The company had its IPO in 2017 at $3.60. As of this writing, TTD shares were up 1,800% from that level.
The company continues to perform well. Its last quarterly earnings were in February was a good report:
- Earnings increased 24% year-over-year, reaching $395.6 million. This beat estimates by $6 million.
- Adjusted net income also rose, hitting $208.1 million, an increase of 13%. EPS increased to $.42 a share, also beating estimates.
The stock is still down around 30% compared to where it was last year, but much of this is tied directly to the pandemic, not the performance or management of the company, which remains relatively solid. Demand-side platforms all took major hits during the height of the 2020–2021 pandemic.
Despite these issues, the company has reported tremendous revenue growth: In the four quarters of 2021, revenue grew 37% (Q1), 101% (Q2), 39% (Q3), and 24% (Q4) — and that’s despite the fact that 2020 included heightened political spending. The company’s EBITDA margin showed similar growth, increasing 32%, 42%, 39%, and 48%.
This growth has led to analysts’ relatively high expectations for The Trading Desk: its consensus growth for 2022 is a 31% revenue growth and a 19% adjusted EBITDA growth. This forecast is based on the continued expected growth of The Trade Desk’s media buys.
Analysts Best Case Is 100% Upside
The Trade Desk has an advantage over similarly situated companies because it’s independent. This means that it is not owned by any network or content creation platform, freeing it to sell ads on hundreds of platforms. This positioning gives it access to revenue and technology that affiliated platforms simply don’t have.
10x In 10 Years
- solid earnings growth,
- proven ability to implement new technologies
- 95% customer retention rate
- unique positioning vs most ad-tech platforms
In the short-term, The Trade Desk benefits from a high median price target by the analysts who cover the stock, with a one-year expectation of more than 50% growth.Over the long-term, The Trade Desk platform leverages artificial intelligence to support marketers, who buy programmatic ad impressions. That allows real-time bidding, which is comparatively advantageous to traditional media buying. Media buyers can measure and optimize campaigns more precisely using TTD.
As the value proposition The Trade Desk offers becomes more clear, partners have come on board in droves. From Samsung to Walmart, The Trade Desk has ad inventory that is the envy of competitors. In spite of that, its market share is tiny – small single digits in percentage terms – relative to overall digital ad spend. With the market size expanding rapidly yearly this company could be a 10x over the next 10 years.
