Chris Perruna
Real Estate Development Executive, Individual Investor
The Trade Desk is spiraling on concerns over its fees, and the stock sits 84% off its highs. Omnicom, one of the world's largest ad companies, has launched an audit of its fees, which @StockSavvyShay says makes this a broader industry reckoning over fee transparency rather than just a Publicis dispute, and an identity crisis for a company built as the clean alternative to walled gardens. 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 will only bottom once it is removed from the S&P 500, because its problems are now structural and will linger. Management issues are everywhere, it failed to use the agentic AI wave as Zeta has and let a profitable model slide into negative operating leverage, and many customers seem angry. A ship this messy cannot be turned around quickly. 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 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 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 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 likely to stay in the penalty box for a while because its shareholder base is so burned. With nearly everyone underwater heading into tax-loss selling, pressure looks immense, and after accounting for stock-based compensation and operating cash flow, a fall to $7-9 would make sense on valuation. It could eventually work and re-rate, as busted 2021 SPACs and growth stocks did after 2-3 sideways years, but even speculators should wait. x.com
The Trade Desk's management credibility, Jeff Green's in particular since the rest of the team is new, is now really doubtful. A big revenue miss came on guidance that had already been cut dramatically, and another weak guide followed, so the quarter looks awful on first impression. x.com
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 a deflating, Ponzi-like former high flyer, with revenue growth slowing every quarter while costs explode. Growth decelerated from 25% to 19%, 18%, 14% and 12% over the past year, and the Q2 guide implies just 8%. The stock traded at 30x revenue only 18 months ago. x.com