Trade Desk Stock Up 29.5% on Stellar Q3 Results


Shares of The Trade Desk, Inc. (TTD) surged 29.5% after the company reported stellar third-quarter results, exceeding both earnings and revenue estimates. The solid results were aided by continued momentum in ad spending by businesses worldwide as economies rebound. Shares closed at $88.77 on November 8.

TTD provides a technology platform for advertising buyers in the U.S., Europe, and Asia, with it boasting a market cap of $32.81 billion. The company’s shares have gained 81.3% over the last six months.

Stellar Q3 Results

The company’s quarterly earnings grew 38.5% year-over-year to $0.18 per share, outpacing Street estimates of $0.15 per share.

Moreover, revenue came in at $301.1 million, a 39% growth year-over-year, surpassing analyst estimates of $283.52 million. Furthermore, TTD’s customer retention remained at 95% in Q3, similar to the previous seven years.

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Management Comments

Founder and CEO of TTD, Jeff Green, said, “The world’s leading brands and agencies are increasingly using our platform to apply data-driven strategies to drive precision and value across their campaigns.”

Green added, “With the launch of Solimar, we are working with the industry to pioneer even greater data-driven precision, whether it’s the application of shopper data in a measurement marketplace, surfacing the right data for every advertising impression, or new approaches to identity that help advertisers make the most of their valuable data. As a result, we’re seeing growth across all channels, and none more so than Connected TV, as viewers shift to new digital, streaming services and advertisers apply data to TV ad campaigns for the first time.”

Guidance

According to TTD, the COVID-19 pandemic has hampered the advertising budget of businesses, which has impacted demand for the company’s offerings. However, TTD forecasts fourth-quarter revenue of at least $388 million, against the consensus estimate of $387 million.

Wall Street’s Take

Impressed with TTD’s Q3 performance, Oppenheimer analyst Jason Helfstein lifted the price target on the stock to $100 (12.68% upside potential) from $95, while maintaining a Buy rating.

As per Helfstein, TTD is one of the most attractive names and a clear software market leader in digital advertising. The analyst noted that the Identifier for Advertisers (IDFA) and global supply chain headwinds are not having a material impact on platform ad spend.

Helfstein said, “While Q4 revenue guidance was in-line with Street, we see upside to estimates as TTD’s fastest-growing Connected TV (CTV) segment is likely to benefit from holiday season budget allocation. Additionally, Walmart demand-side platform (DSP) integration is now live and could provide upside to FY:22 estimates. Given its advantageous positioning within the secular growth CTV industry, we see ample room for growth.”

Overall, the stock has a Strong Buy consensus rating, based on 12 Buys and 3 Holds. The average Trade Desk price target of $93.62 implies 5.49% upside potential to current levels.

Smart Score

The Trade Desk scores a “Perfect 10” on TipRanks’ Smart Score rating system, indicating that the stock has strong potential to outperform market expectations.

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