While The Trade Desk once soared as a favorite among investors, the advertising technology company has hit a rough patch that sent its stock tumbling 77% from its 52-week high of $122.49 down to around $27. The company’s market value has shrunk to roughly $13 billion, leaving many shareholders wondering what went wrong with their former star performer.
The numbers tell a sobering story. Over the past month alone, shares dropped 27%, and the year-to-date decline reached nearly 34%. The stock now trades well below both its 50-day average of $36 and its 200-day average of $47, signaling sustained downward pressure. Some major investors have lost confidence too. Hantz Financial Services slashed its position by over 91%, while Azzad Asset Management cut its stake in half.
Here’s the puzzling part: The Trade Desk’s actual business performance looks solid. The company reported third-quarter revenue of $739 million, beating analyst expectations and growing nearly 18% from the previous year. Earnings per share came in at $0.45, topping estimates. Revenue has doubled since 2021, climbing from $1.2 billion to $2.4 billion in 2024. Operating margins have expanded impressively from 7% to 19%. The company’s gross profit margin has remained strong at 79%, reflecting its efficient platform model. Lower interest rates generally make growth stocks more attractive because future earnings are worth more today, which could help explain part of the valuation disconnect.
Management seems committed to supporting the stock price. In November, they approved a $500 million buyback program. They’ve also guided investors to expect at least $840 million in revenue for the fourth quarter. The company continues investing heavily in research and development while maintaining a healthy profit margin above 15%.
Analysts remain cautiously optimistic with an average price target around $53 to $64, suggesting potential upside of roughly 29% from current levels. Some models predict a possible recovery with annualized returns near 15% over the next two years. The company’s focus on retail media and new identity solutions could drive future growth. The Trade Desk’s Kokai platform now serves as the default experience for 85% of clients, delivering significant performance improvements over its predecessor.
The disconnect between strong fundamentals and weak stock performance creates an unusual situation. Investors face a choice: view this as a buying opportunity in a temporarily discarded stock, or heed the warning from fleeing institutional investors who see challenges ahead.
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