Has The Trade Desk Slide In 2025 Created A Long Term Opportunity For Investors?

• Wondering if Trade Desk is a beaten down opportunity or a value trap at current levels? You are not the only one trying to figure out whether the recent slide has finally made the stock attractive again.
• After a bruising stretch with the share price down about 0.5% over the last week, 17.5% over the last month, and a steep 66.6% year to date, many investors are reassessing both the risk and potential upside from here.
• Recent headlines around shifting digital ad budgets and a more cautious macro backdrop have added pressure to ad tech names like Trade Desk, even as the industry continues to move toward programmatic and data driven spending. At the same time, growing interest in connected TV and retail media networks has kept the company in the conversation as a long term structural winner.
• On our framework, Trade Desk currently scores a 2/6 valuation score, signalling it screens as undervalued on only a couple of checks. Next, we will walk through different valuation approaches, and then finish with a deeper way to think about what the current price really implies about its future.

Trade Desk scores just 2/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.

Approach 1: Trade Desk Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow model estimates what a business is worth today by projecting the cash it can generate in the future and discounting those cash flows back to their value in todays dollars.

For Trade Desk, the latest twelve month Free Cash Flow is about $722.5 million, reflecting a business that is already generating substantial cash. Analysts expect this to keep growing, with Simply Wall St extending their forecasts beyond the typical five year window. Under the 2 Stage Free Cash Flow to Equity model, projected Free Cash Flow reaches roughly $2.05 billion by 2035, with growth gradually slowing as the company matures.

Aggregating and discounting these projected cash flows results in an estimated intrinsic value of $81.63 per share. Compared with the current market price, this implies the stock is trading at a 51.8% discount, suggesting the market is heavily discounting Trade Desks long term cash generation potential.

Result: UNDERVALUED

Our Discounted Cash Flow (DCF) analysis suggests Trade Desk is undervalued by 51.8%. Track this in your watchlist or portfolio, or discover 908 more undervalued stocks based on cash flows.

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Trade Desk.

Approach 2: Trade Desk Price vs Earnings

For profitable companies like Trade Desk, the Price to Earnings ratio is a useful way to gauge how much investors are willing to pay today for each dollar of current earnings. A higher PE can be justified when a business has strong growth prospects and durable advantages, while slower growth or higher risk usually call for a lower, more conservative multiple.

Trade Desk currently trades on a PE of about 43.4x. That is well above the broader Media industry average of around 15.4x and also richer than the peer group average of roughly 30.4x, which highlights that the market already assigns a premium for its growth profile and competitive position. Simply Wall St also calculates a Fair Ratio of 26.3x for Trade Desk, which is the PE level that would typically be warranted given its specific mix of earnings growth, margins, size, industry and risk factors. This Fair Ratio is more tailored than a simple comparison with peers because it adjusts for company specific strengths and vulnerabilities rather than assuming all media names deserve the same multiple. On this framework, Trade Desk’s current PE looks stretched versus its Fair Ratio and the stock screens as overvalued on an earnings basis.

Result: OVERVALUED

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover 1442 companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your Trade Desk Narrative

Earlier we mentioned that there is an even better way to understand valuation, so let us introduce you to Narratives, a simple way to connect your view of Trade Desk’s business with the numbers by turning your assumptions about its future revenue, earnings and margins into a coherent story that flows into a financial forecast and, ultimately, a Fair Value you can compare against today’s share price. Narratives on Simply Wall St’s Community page, used by millions of investors, make this easy and accessible. They update dynamically as new information like earnings releases, product launches or industry news arrives, so your story and valuation stay current instead of going stale. For example, one Trade Desk Narrative might assume strong global connected TV adoption, rising margins and a premium future PE, leading to a Fair Value closer to the top of the analyst range around $135. A more cautious Narrative could focus on competitive and margin risks, slower growth and a lower multiple, landing nearer the bearish $34 target. The platform lets you explore, adapt and compare these perspectives in seconds.

Do you think there's more to the story for Trade Desk? Head over to our Community to see what others are saying!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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