"As a result, the stock soared from $27 at the start of 2020 to $142 in December 2024. At the peak, it traded at lofty valuations such as 134 times free cash flow and 227 times earnings. But the market turned against The Trade Desk in a heartbeat. One mildly disappointing revenue report later, the stock dipped 34% in a single week and then kept sliding."
"First, I'll admit that The Trade Desk's challenges are real. Sales growth has slowed down in recent quarters (and should continue to decline in the next report) for two key reasons. First, political marketing gave the ad industry a temporary boost in 2024 that isn't there this year. Comparing these distinctly different periods is like swimming with a weighted vest and heavy boots -- last year's full-year sales growth of 26% will retreat below 20% in 2025."
"Second, a significant portion of The Trade Desk's sales come from a small group of very large customers. Recent case studies include household names like McDonald's, Pepsi, IKEA, and Disney. It's cool to have a strong stable of repeat customers, but there's a downside, too. These big names are also more vulnerable to the ongoing tariff uproar than smaller, more local companies. So, the tariff tension weighs very directly on large ad campaign bud"
The Trade Desk grew rapidly from 2020 to 2024, with its stock rising from $27 to $142 and trading at very high multiples like 134 times free cash flow and 227 times earnings. A single mildly disappointing revenue report triggered a 34% one-week drop and the stock now trades about 65% below its December peak. Sales growth has slowed and is expected to decline further as the 2024 political advertising boost fades and comparison base effects reduce growth. Revenue concentration among a few large clients exposes the company to tariff-related pressure on major ad budgets, weighing on near-term performance.
Read at The Motley Fool
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