Ttd Stock – Trade Desk, Inc. shares. (NASDAQ: TTD ) is down about 24% from its most recent rally at the time of writing. The company reported a robust FQ3 that shows Apple’s ( AAPL ) resilience to privacy changes. In addition, as the Uniform ID (UID) 2.0 project expands in Asia, it continues to gain attention recently. We’ve expanded our premium television (CTV) offering by adding NBCUniversal’s (CMCSA) Peacock service as a partner.
The trading desk’s stock performance no doubt helped cushion the blow from investments in ad tech and CTV. Discuss whether investors should consider adding the stock given the recent strong recovery.
Readers can easily understand from the above chart that the recent recovery reduced TTD’s earnings for the year by only 6.2%. While it outperforms its ad tech and broadcast rivals here, it still lags behind the broader market. For example, TTD’s year-to-date return is significantly lower than the 23.6% year-to-date return of the Invesco QQQ ETF ( QQQ ).
Sell Trade Desk Stock, Analyst Says, Citing Ad Industry Risks
Pure ad tech stocks and CTV advertising had a year to forget. The CTV advertising market continues to grow rapidly, but supply chain disruptions and Apple IDFA changes are affecting investor confidence in investing in these companies. Moreover, last year’s sharp growth also gave these investors reasons to hold on to profits and reduce risk. Negative investor sentiment, challenging macro environment and peak profit-taking have weighed on the portfolio performance of these stocks this year.
But the stability of Trading Desk, despite its excellent ratings, is a silver lining for us. In its Q3 earnings report, the company said it saw no significant impact from Apple’s IDFA changes and supply chain disruptions. We believe the full impact of Apple’s new AppTrackingTransparency (ATT) is still unfolding. Platforms that use direct response marketing suffer from specific targeting and attribution. In fact, they were so impressed with their attribution capabilities that Digital Turbine (APPS) CEO Bill Stone noted (paraphrased):
The players who are disproportionately affected by the IDFA changes are the players who rely heavily on IDFA features. For example, I saw a Starbucks ad and I’m a big gamer. I didn’t click. I just saw this and compare it to IDFA where someone can go to the app store and download this app. You can’t even click, but the platform can claim authorship and get paid for it. (From Digital Turbine’s Q2 2022 Earnings Briefing)
Avid readers may recall that the Trade Desk has recently been promoting CTV and its Solimar platform to advertisers. These platforms do not rely on Apple IDFA. Instead, they rely primarily on data from advertisers and publishers and TTD’s measurement and attribution system. As a result, investors and marketers are beginning to realize that Trade Desk is ahead of industry leaders in the new era of digital advertising. Trading Desk CEO Jeff Green commented at Solimar’s launch in July (REDACTED).
The Trade Desk Stock (ttd): Should You Buy It Now?
Marketers want to be proactive about a wide range of new opportunities, from TV advertising to help better align campaigns to business growth and improve consumer privacy concerns. And now we’re launching Solimar to help marketers take full advantage of these opportunities on the open web. Solimar’s transparent cross-channel accuracy and measurement capabilities differ from the limitations of Walled Gardens. (Trade Desk Article)
So, the Trade Desk’s foresight to protect and improve marketers’ measurement capabilities gives investors Green & Co. it is clear that he gives great confidence in his ability. perform actions. Also, investors should not underestimate the speed that the Trading Desk can get. A goal/answer is “meaningless” if it cannot be measured.
It also marks the beginning of Cupertino’s long-awaited foray into the digital advertising mass market. So, Apple’s entry into the ATT structure is just the beginning of a multi-year quest to claim leadership. Apple wants to regain control of the iOS advertising ecosystem, making competitors the main beneficiaries. Levi Matkins, CEO of mobile advertising platform LifeStreet, said (edit):
I think privacy is important to Apple, but ultimately I want to reduce the effectiveness of advertising outside of the App Store and keep users in the ecosystem. They value the ability to shape how apps are discovered now and in the future, and how to determine which apps stand out for download. I can do it. It’s also worth noting that ATT benefits Apple beyond the App Store, as it reduces Facebook’s revenue and influence. (Digiday)
Trade Desk Stock Forecast 2022: Is Ttd A Buy Due To The Rise In Online Advertising?
Bernstein Research also noted that Apple is “generating an additional $1 billion in annual revenue” from mobile advertising, which is projected to reach $4 billion this year. In addition, Apple’s advertising is gaining momentum while its peers are struggling. Added (edited):
Apple’s advertising business (primarily search advertising in the App Store) may continue to be profitable. Apple’s own app doesn’t allow users to track it. Apple uses its own API for its advertising network, which allows for more detailed demographic information. CPC for Apple search ads grew 67 percent in the second quarter. This indicates more effective targeting of advertising and increased interest of advertisers. (insider)
In this way, the Trade Desk platform has sidestepped the serious attribution issues faced by its ad tech peers. Additionally, Kriteo noted that marketers’ campaigns can be severely hampered without effective measurement. Added (edited): “Without effective measurement, marketers cannot determine which contextual topics perform best on a website, let alone multiple sites. We hope that vendors will understand this feedback.” The longer it takes, the more money will be spent and will directly affect the publisher’s bottom line.”
It is also important for publishers that Trade Desk continues to move towards the UID 2.0 project. As Google ( GOOGL ) ( GOOG ) approaches its cookie expiration date, publishers are increasingly seeing the appeal of UID 2.0 as an alternative identifier. In addition, Trade Desk’s powerful first-party data input capabilities allow marketers to leverage publisher first-party data to improve targeting and attribution results. CEO Jeff Green also recently highlighted the popularity of the UID 2.0 movement. He added (edit):
The Trade Desk Gathers Positive Momentum
In addition, the Trade Desk reported the growth of UID 2.0 in the Southeast Asian market in early December. This led to the ID being adopted by over-the-top (OTT) players in the region, which attracted more attention. Add TTD (edit): “Major OTT players in Southeast Asia opt to use Unified ID 2.0. These include OTT platforms iQiyi, TrueID, WeTV/iflix, Vietnam’s FPT Play and VTV Giai Tri (VTVE), also includes Indonesia’s largest domestic OTT platform. , Vidio.”This shows that the UID 2.0 movement, led by the Trade Desk, has definitely gone global. The growing adoption of UID 2.0 by publishers around the world adds confidence to the Trade Desk’s mission on the open web.
TTD stock is currently trading around 74.2x EV/NTM EBITDA. This is slightly higher than the three-year average of 70.6x. Therefore, there is no doubt that TTD stock is overvalued. However, the company has been very profitable, and its valuation is nowhere near its three-year high of 139x. In addition, CEO Jeff Green & Co. said the platform would benefit publishers and advertisers. We believe we have demonstrated excellence and resilience, so we believe the reward is warranted.
DCF Metric Estimate WACC 7.25% Revenue Estimate $2.9B in FY25 21-25 CAGR of 25.9% Adjusted EBITDA Estimated FY21-25 $1.22B. Adjusted EBITDA CAGR FY5625 YYFM Valvlu% Multiple 40x TTD Share Estimated Fair Value Exit $82.16 Click to Enlarge
Thus, Trade Desk shares are up approximately -5.7% relative to our estimated fair value. We believe it is in the fair value zone. Given TTD’s strong position in ad technology, we are confident in Jeff Green & Co.’s capabilities. Walking forward
The Trade Desk Still Looks Like A Winner After Post Earnings Rally
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