After 2020’s amazing returns for growth-oriented stocks, 2021 has been a real let down. Many names have struggled in 2021’s uncertain environment, marking a sharp reversal of recent trends.
While shares of the Trade Desk (TTD) have been volatile, compared to many of its peers, they have fared rather well. In fact, during November, the stock recorded a 38% gain, on the back of impressive Q3 results.
Needham’s Laura Martin has been a fan of the ad tech leader and believes the company is poised to keep on outperforming. The firm recently hosted TTD’s Founder and CEO Jeff Green to get a demo of the company’s new trading platform – Solimar – and hear the lowdown on where the company is heading.
Martin noted several takeaways from the conversation.
First off, with Amazon also a force to be reckoned with in the ad space, the giant has been mentioned as a competitor the Trade Desk should keep an eye on. But this is a misconception, says Martin. “AMZN is not a competitor to TTD because: a) AMZN has major conflicts of interest, so it will never be deemed impartial like TTD; b) AMZN’s data transparency is much less than TTD’s; and c) many advertisers will never share data with AMZN because it competes with them, so TTD’s AI will always be better,” the 5-star analyst explained.
Secondly, one of the main bullish arguments for ad tech companies is based on the secular trend of CTV (connected TV) with ad spend expected to pivot away from linear TV to the segment.
Because CTV is scattered across numerous TV and film content owners, the trend favors the Open Internet (including TTD), rather than Walled Gardens (Facebook, Meta, Amazon), with the power veering toward “audience re-aggregators” like TTD. CTV’s impact will drive the Open Internet to become more “efficient and transparent” than the CTV Walled Gardens, Green said.
Green thinks competition in the DSP space will only get more competitive over the next 5 years, but is not concerned over any rivals, believing the ad tech segment will be “healthier with more competitors on both the DSP and SSP side.”
Maybe Green is unperturbed by growing competition due to the fact TTD is making inroads on the international stage. International sales are currently growing faster than US revs and only expected to increase over time.
Martin evidently liked what she heard. Following the chat, the analyst raised her price target from $110 to $115, suggesting room for 28% upside in the year ahead. (To watch Martin’s track record, click here)
Most analysts agree. Based on 11 Buys vs. 3 Holds, the stock has a Strong Buy consensus rating. The average target is just above Martin’s old one and set to provide investors with returns of 13% over the one-year timeframe. (See Trade Desk stock analysis on TipRanks)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
