Bill 'Latency Lord' Brennan
Fundamental Growth Investor, B2B/Sector Leaders & Picks-and-Shovels
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'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 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.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 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
The Trade Desk's weak results raise doubts about CEO Jeff Green's $150 million share purchase, since it was not made for profit. Per @negligible_cap, first-quarter adjusted EPS of 28 cents missed the 32-cent estimate, and second-quarter adjusted EBITDA guidance of about $260 million trailed the $292.4 million estimate. 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 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'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 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
The Trade Desk faces competitive challenges and looks more like a survival story, while Zeta Global looks like a robust growth story, so owning Zeta does not make The Trade Desk worth buying. x.com x.com
