Trade Desk (TTD) Valuation in Focus After Earnings Miss, CFO Departure, and Slower Growth Concerns

Trade Desk (TTD) investors have had plenty to think about lately. The stock fell sharply after the company reported a weaker-than-expected second quarter, announced the departure of its longtime CFO, and was met with a flurry of analyst downgrades. In addition, the much-anticipated Kokai AI platform launch has seen a hesitant response from some ad agencies, making it little surprise that sentiment has turned cautious.

These developments come at a time when Trade Desk’s core business is facing slower revenue growth and tougher competition from both tech giants and nimble rivals. Over the past year, shares have dropped nearly 48%, with this past month adding further pressure. That represents a notable shift for a company that had once been celebrated for double-digit revenue and net income gains. While its AI-powered Connected TV efforts have shown promise, momentum in the stock has clearly faded as markets reassess future growth rates.

After such a steep selloff, it is fair to ask whether this pullback presents a window for value-focused investors or if markets are simply catching up to new realities in digital advertising.

Most Popular Narrative: 30.5% Undervalued

According to the community narrative, Trade Desk is viewed as notably undervalued based on projected future growth and profitability. This suggests meaningful upside potential for investors.

The continued rapid shift of ad spend from linear TV to connected TV, or CTV, is driving significantly faster growth for Trade Desk's highest-margin channel. Deepened relationships with leading CTV and streaming content partners, such as Disney, Netflix, Roku, LG, and others, position Trade Desk to capture a larger share of the expanding premium digital video ad market. This could accelerate revenue and earnings growth as CTV penetration increases globally.

Interested in what is fueling this eye-catching valuation gap? At the center are strong expectations for rapid expansion, higher margins, and a leadership position in digital video advertising. Want to know which projections could propel Trade Desk beyond the current consensus? Review the underlying numbers and see the forecast that is shaping investor confidence.

Result: Fair Value of $75.79 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts. However, Trade Desk’s heavy dependence on large global clients, along with fierce competition from tech giants, could quickly challenge these optimistic growth projections. Find out about the key risks to this Trade Desk narrative.

Another View: SWS DCF Model

While some investors focus on industry price ratios to gauge valuation, our SWS DCF model points to a different story for Trade Desk. This approach weighs future cash flows and suggests that the company may be undervalued. Is the market overlooking long-term potential, or is it rightfully cautious?

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Trade Desk for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own Trade Desk Narrative

If you see Trade Desk’s outlook differently or want to dig deeper into the data, you can easily craft your own perspective in just a few minutes and do it your way.

A great starting point for your Trade Desk research is our analysis highlighting 3 key rewards and 1 important warning sign that could impact your investment decision.

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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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