Broken Moats
Family-Office Long/Short Research, Variant Perception
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
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
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
The Trade Desk is basically priced for bankruptcy, so a strong mean-reversion move could come soon. x.comÂ
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.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 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's deceleration is structural, not macro, as its Q3 guidance shows. Per @StockSavvyShay, Q2 revenue was $715M against $752M expected, a miss that could be shrugged off, but Q3 revenue guidance of $650M fell far short of the Street's $808M, with EBITDA guided to $160M against $343M. The 21% drop is the market finally believing the company. 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
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'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.comÂ
