TTD Stock: The Trade Desk Tanks 17% Post Q3 Results
13 Novembre 2023 - 11:00AM
Finscreener.org
The digital advertising
firm The Trade Desk (NASDAQ:
TTD) experienced a 17%
drop in its stock value on Friday following the announcement of
third-quarter results and a revenue forecast that didnU+02019t meet
expectations.
The Trade Desk projected a
revenue of at least $580 million in Q4 of 2023, whereas analysts
had anticipated a higher figure of $610 million.
The company did surpass
analystsU+02019 third-quarter predictions for earnings and revenue.
It reported adjusted earnings of $0.33 per share, above estimates
of $0.29 per share. It also reported revenue of $493 million, above
estimates of $487 million.
TTD expects enterprise ad spending to be lower in
Q4
Analysts have focused on
potential ad expenditure decreases by enterprises for the
yearU+02019s final quarter. The Trade Desk noted that there has
been a sense of caution among advertisers, particularly in the
automotive and entertainment sectors, both of which have been
impacted by recent strikes.
According to Wolfe Research
analysts, even as the largest independent demand-side platform
(DSP), The Trade Desk isnU+02019t expected to be shielded from a
decline in ad spending.
The Trade Desk joins a list of
companies, including Meta (NASDAQ:
META),
Pinterest (NYSE:
PINS), and
Snap (NYSE:
SNAP), that have signaled
the potential for weaker ad spending, influencing their cautious
stance or moderated expectations for the fourth
quarter.
Wolfe Research analysts expressed
doubts about the durability of The Trade DeskU+02019s rapid growth
in connected TV (CTV), a significant part of the companyU+02019s
revenue stream. The analysts raised questions on whether CTV can
maintain its current growth trajectory in the medium term, which
could impact The Trade DeskU+02019s overall revenue growth that has
been bolstered by this business and the companyU+02019s increasing
market share within that segment.
However, analysts at Needham view
the stockU+02019s decline as an investment opportunity. They
maintain that The Trade Desk typically outperforms its guidance and
that the current fundamentals do not undermine the companyU+02019s
dominant strategic position, competitive barriers, or pricing
power. Therefore, they recommend purchasing shares during this
downturn.
Needham analysts encourage
investors who may have previously missed out on The Trade Desk to
take advantage of the current situation to buy shares of the ad
tech industry leader at
what they consider a discounted price.
Is TTD stock a good buy right now?
Valued at $31.3 billion by market
cap, TTD is among the most prominent digital ad companies in the
world. Analysts tracking TTD stock expect it to increase revenue
from $1.58 billion in 2022 to $2.4 billion in 2024. Its adjusted
earnings are forecast to expand from $1.04 per share to $1.5 per
share in this period.
So, TTD stock trades at 13.1x
forward sales and 42.6x forward earnings, which is expensive. But
growth stocks command a premium, and TTD is on track to increase
adjusted earnings by 24% annually in the next five
years.
Of the 19 analysts tracking The
Trade Desk stock, 18 recommend Buy, and one recommends Hold. The
average price target for TTD stock is $81.71, indicating an upside
potential of 27.7% in the next 12 months.
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