Chris
Engineer & Entrepreneur, Equity/Crypto Swing Trader, Macro & Trade Setups
The Trade Desk is set up for reversion to the mean, supported by a strong balance sheet. x.comÂ
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.comÂ
The Trade Desk could fall to $7.27 without any bankruptcy, simply through a continued decline in earnings. 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
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.comÂ
The Trade Desk looks like a falling knife after a quarter that broke its growth story, though a turnaround remains possible. Per an earnings recap, Q2 revenue of $715M missed its own $750M guidance as growth slowed to 3%, Q3 guidance of at least $650M implies a 12% YoY decline, and an executive exodus followed. A drop toward $11 would make it worth reconsidering. x.comÂ
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.comÂ
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.comÂ
The Trade Desk carries serious corporate governance issues and potential accounting issues, the latter suggested by recent departures in its filings. @aleabitoreddit overlooks those risks in arguing that short-term ChatGPT ad monetization is undervalued, while calling a mean-reversion bounce low conviction. 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