Nicholas Mugalli
Institutional TMT & Macro Research, AI/Semiconductors/Policy
The Trade Desk is vulnerable because Amazon has a comparable ad platform and a habit of ruthlessly eating competitors, a bigger concern than AI disruption. Its gross profit versus opex picture looks far weaker than AppLovin's, so its trajectory inspires much less confidence. x.comÂ
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.comÂ
AppLovin's e-commerce push looks real, making the beaten-down stock an incredible entry. A member of AppLovin's e-commerce team who works with its largest advertisers said results for non-gaming businesses are absolutely cranking and budgets are rising across many commerce clients; that is one person's word. Per @m0xt_, Northbeam data show AXON's share of tracked ad budgets jumped to 2.34% in the week of Sep 20-27, from about 1.7-1.9% through August and September. x.comÂ
Amazon's weak retail growth has shaken the earlier buy case. Online-store sales rose just 2% year over year, and the retail numbers look so poor that it is no longer clear at what price the shares are a buy. x.com x.com x.comÂ
The Trade Desk is the worst stock ever seen, now down 50% since CEO Jeff Green bought $150 million of shares a few months ago, a purchase that is hard to square with the numbers he saw. Amazon's growing ads business is a big part of the damage. x.com x.comÂ
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.comÂ
AppLovin is probably stuck for a while after falling more than 50% this year, partly penalized unfairly for The Trade Desk's fall as a fellow black-box ad-tech name. Too few holders understood the business on the way up, which makes the way down painful. It may become a good long in 2027, pending more work on valuation. x.comÂ
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.comÂ
AppLovin's growth, liquidity, free cash flow and profitability make it the clear winner among beaten-down stocks with attractive fundamentals. Research Desk's chart shows EPS generally beating estimates, though the latest revenue missed. x.comÂ
The Trade Desk is not a buy even at $13 because founder Jeff Green, who still runs the company, no longer earns trust. Management made promises it failed to deliver, and Green replaced nearly the entire team in the past year, a major red flag that raises the question of whether he, not the ousted managers, is the real problem. Fundamentals point to disruption: revenue growth fell from 28% to 3%, gross margin from 82% to 74%, and operating income is shrinking fast. x.com x.comÂ