If the move holds in Friday’s session, it would be the worst drop for TTD stock in over a year.
- Trade Desk’s Q2 sales and profit and its Q3 revenue forecast came in below Wall Street expectations.
- Earlier this year, three of the world’s largest advertising holding companies – Publicis, WPP and Dentsu – began distancing themselves from The Trade Desk.
- Stocktwits sentiment for TTD shifted to ‘extremely bullish’ from ‘neutral.’
Shares of The Trade Desk tumbled more than 27% on Friday after the company posted second-quarter results and forecast current-quarter revenue well below Wall Street expectations, leading to a wave of Wall Street analyst downgrades.
Wall Street Cuts TTD Stock Ratings Massively
At least four analysts downgraded TTD following the Q2 miss, with price target cuts ranging from 36% to 67%.
Guggenheim’s Michael Morris cut to ‘Neutral’ from ‘Buy,’ slashing his target to $12 from $25, saying he lacks conviction in any upward inflection given the “prevailing downward demand trend,” according to a summary on The Fly. He added that management’s messaging “feels even further detached from the results.”
Raymond James cut its TTD rating to ‘Underperform’ without a price target, flagging a “sharply negative” Q3 outlook and warning that advertisers are gravitating toward lower-cost media, a dynamic the firm expects to intensify into Q3, when Trade Desk could post its first-ever non-pandemic year-over-year revenue decline despite political spend tailwinds.
Baird downgraded to ‘Neutral’ from ‘Outperform’ and slashed its target to $9 from $27, calling the report “just awful” and warning of “a long road ahead to any type of recovery” given the significant reset in estimates and another blow to management credibility.
Truist cut to ‘Hold’ from ‘Buy’ with a $16 target, down from $35, citing both macro headwinds and internal execution failures, and cautioning that any fix is “likely to take several quarters to positively affect growth.”
Morningstar lowered its price target on the stock to $16 from $21. “Our measurements show that growth in the overall advertising market is reaccelerating, yet it continues to move away from The Trade Desk,” the research firm said in its note.
“The Trade Desk’s slowdown and an artificial intelligence-driven advertising supply chain that favors proprietary data (where The Trade Desk remains underresourced) give us limited confidence in a near-term turnaround.”
Morningstar also highlighted that, beyond lower growth expectations, Trade Desk’s tension with its largest customers, significant senior management turnover, and massive stock-based compensation are headwinds for the business in its view.
Earlier this year, three of the world’s largest advertising holding companies – Publicis, WPP and Dentsu – began distancing themselves from The Trade Desk. Publicis dropped the company from its list of recommended demand-side platforms following an audit, while WPP and Dentsu pulled back from its OpenPath product, citing concerns over fee transparency, billing practices and visibility into where ads were running. The Trade Desk disputed the allegations and defended its platform.
TTD’s Guidance Disappoints
For Q3, The Trade Desk expects revenue of at least $650 million, far below analysts’ estimate of $805 million, according to Fiscal AI data.
The company’s Q2 revenue of $715.1 million and adjusted earnings of $0.34 per share, both missed Street expectations of $751.4 million and $0.40, respectively.
“These numbers are not a reflection of our company or the long-term opportunity in front of us. We underperformed our own expectations for 2 main reasons,” CEO Jeff Green said during the company’s post-earnings analyst call. “First, the macro conditions have made it more difficult for some of the world’s largest brands to grow; secondly, we didn’t execute as well as we could have.”
Retail View On TTD
Trade Desk was the top trending ticker on Stockwits at the time of writing, with retail sentiment for the stock shifting to ‘extremely bullish’ from ‘neutral’ the previous day.
“$TTD No one is ‘stealing’ $TTD’s business. The ad environment is tough, yet revenue is STILL growing and cash generation remains strong,” a trader said.
“The company is buying back its own stock. Institutions own the majority. And if you actually listen to the earnings call, management sounds extremely confident about TTD’s future. Ignore the noise. Watch the business,” they said.
Another wrote: “$TTD This stock will recover like there’s no tomorrow see you at $15 then $18.”
As of their last close, TTD shares are down 53% year to date.
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