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The Trade Desk’s (TTD) recent quarterly results have triggered a rapid decline in its share price, presenting a potential opportunity for contrarian investors. While TTD’s chart displays volatility, the California-based company, offering a cloud-based platform for digital advertising campaigns, has caught the attention of contrarian investors due to its recent dip. The article explores whether it’s the right time to take action on TTD stock.
Key Points:
- Contrarian Perspective: Despite a choppy chart and volatility, contrarian instincts suggest a significant opportunity in The Trade Desk’s stock following its recent quarterly results. The article adopts a cautiously bullish stance on TTD stock.
- Analyst Upgrade and De-Risking: New Street analysts upgraded TTD stock from Sell to Neutral, asserting that TTD shares have been “de-risked” due to cautious commentary on brand advertising spending and macro-level concerns. However, the upgrade did not prevent a significant decline in TTD’s stock after Q3 earnings.
- Q3 Earnings Overview: Despite the recent stock decline, The Trade Desk reported strong Q3 results with $493 million in GAAP revenue, up 25% YoY, beating Wall Street expectations. Adjusted earnings per share were $0.33, surpassing the consensus estimate of $0.29.
- Customer Retention and Share Buybacks: The Trade Desk showcased a remarkable customer retention rate of over 95% in Q3 2023, maintaining this level for nine consecutive years. Additionally, the company repurchased $90 million worth of common shares in the quarter, with $273 million available for further buybacks as of September 30, 2023.
- Revenue Guidance and Market Reaction: Despite positive results, TTD’s current-quarter revenue guidance of “at least $580 million” fell below Wall Street’s consensus estimate of around $610 million. The market reacted negatively, leading to a decline in TTD stock.
- Analyst Recommendations: According to TipRanks, TTD holds a Strong Buy rating based on 18 Buys and one Hold in the past three months. The average price target implies a 27.6% upside potential.
- Investment Consideration: The article advises investors to assess whether the dip in TTD stock is worth buying. While acknowledging short-term market overreactions, it suggests that TTD’s revenue guidance, though slightly below estimates, indicates growth. The stock may be considered for investment, particularly if one can handle the associated volatility.
