Serenity
AI & Semiconductor Supply-Chain Researcher, Trader
The Trade Desk's short-term upside from ChatGPT monetization is undervalued as OpenAI moves to ads. At $22, down from $139, it is priced for distress or disruption even though the business seems to be doing okay, leaving perhaps 40-50% upside back to the low $30s on mean reversion. Conviction is not high. x.com x.com
The Trade Desk is more attractive as a recovery play at 16x earnings than it was at twice the price. The stock was over 30x earnings as recently as March and only became cheap very recently. Whether the company is broken remains an open question; what is clear is that sentiment is worse than a few months ago. x.com
The Trade Desk is undervalued at a P/E of 16.6, priced by the market as if headed for bankruptcy, and it is notoriously known to run in midterm years of presidential elections. It is one of the top three undervalued stocks to seek in this market, alongside Super Micro Computer at a P/E near 12 and Novo Nordisk at 11.4, priced at levels before GLP-1s came out. x.com
The Trade Desk is not cheap just because it is down 70%, since its business is deteriorating. Growth has slowed and margins have weakened for a couple of years, so a 70x forward multiple compressing toward 12–20x reflects lower expected growth, not a bargain. The market rewards earnings growth, revenue growth and improving cash flow, and dip buyers driven by recency bias are missing that. x.com x.com
The Trade Desk is set up for reversion to the mean, supported by a strong balance sheet. x.com
The Trade Desk is basically priced for bankruptcy, so a strong mean-reversion move could come soon. x.com
The Trade Desk's financial trends keep imploding, with its revenue guide 20% worse than already beaten-down expectations. Its founder and CEO's optimism about the future does not change that. x.com
The Trade Desk is cheap against its cash earnings. At $13.40 it trades at 8x cash earnings, while the industry usually gets 20x. At 20x next year's cash earnings, give or take 12%, fair value is $28.76-$36.60, leaving the stock 53% below the low end of that range. This is a valuation read only, not fundamental work. x.com
The Trade Desk looks due for a big dead-cat bounce, possibly to $30, after its CEO bought $150 million of shares in the open market at around $25. The stock now sits near $21, below his purchase price. It is a gut feeling and could take time. x.com
The Trade Desk has shown many red flags, and a huge Q2 miss confirmed them. Revenue of $715M missed the $751M estimate, adjusted EPS fell 17%, and Q3 guidance of at least $650M revenue and about $160M EBITDA was far below estimates of $805M and $341M, per @wallstengine. It bought back $78M of stock while heading for that miss. Unlike AppLovin, it has not been very profitable for years, with heavy dilution and stock-based pay, slower growth and smaller scale. x.com x.com x.com
The Trade Desk can be bought for less than half the price its CEO paid for nearly $150 million of shares in March. He has not sold any of those shares since. x.com
