The Trade Desk Stock Plunges on Soft Revenue, Weak Outlook

TradeDesk activation sign saying "programmatic audio is going where other messaging can't. starting here." — (Image credit: D Dipasupil/Stringer/Getty Images)

The Trade Desk (TTD) stock is tanking Thursday after the advertising platform beat on earnings but came up short of revenue expectations for its fourth quarter and issued a weaker-than-expected top-line forecast for its first quarter.

In the three months ending December 31, The Trade Desk's revenue increased 22.3% year over year to $741 million. Earnings per share (EPS) rose 43.9% from the year-ago period to 59 cents.

"The Trade Desk once again outpaced nearly every segment of digital advertising in 2024," said CEO Jeff Green in a statement, citing annual revenue growth of 26% to $2.4 billion as well as "a record $12 billion of spend on our platform." Green also said The Trade Desk "achieved significant profitability and cash flow."

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The CEO did say The Trade Desk is "disappointed that we fell short of our own expectations in the fourth quarter."

Results were mixed compared with analysts' expectations. Wall Street was anticipating revenue of $758.9 million and earnings of 57 cents per share, according to Barron's.

The Trade Desk forecast revenue of at least $575 million for its first quarter, which also fell short of analysts' expectations of $582.1 million.

The Trade Desk also announced that its board of directors approved an additional $564 million in share repurchases under its current program, bringing the total authorized amount to $1 billion.

Stock buybacks are another way for corporations to boost value for shareholders.

Is The Trade Desk stock a buy, sell or hold?

The Trade Desk has had strong run over the trailing 12 months, nearly tripling the S&P 500's gain with a total return of 65.4% vs 22.2% for the index. And Wall Street is still bullish on the tech stock.

According to S&P Global Market Intelligence, the average analyst target price for TTD stock is $123.09, representing implied upside of more than 46% to current levels. And the consensus recommendation is a Buy.

Analysts will reassess and may revise their ratings and price targets following the disappointing quarter. Indeed, financial services firm Wedbush has already updated its view on the communications services stock.

Analyst Scott Devitt reiterated his Outperform rating (equivalent to a Buy) but lowered his price target to $120 from $145 yesterday.

"The Trade Desk reported disappointing results and guided 1Q below expectations," Devitt wrote in a note on Wednesday, acknowledging the reaction in the after-hours trading market.

"We do not believe that the company's long-term opportunity is impaired based on results and guidance," Devitt said, "and our thesis remains intact."

Joey Solitro is a freelance financial journalist at Kiplinger with more than a decade of experience. A longtime equity analyst, Joey has covered a range of industries for media outlets including The Motley Fool, Seeking Alpha, Market Realist, and TipRanks. Joey holds a bachelor's degree in business administration.