The Trade Desk (TTD) may not be a company most are familiar with. However, this independent advertising giant has shown off quite a bit of skill in recent weeks. Its latest earnings report shows off just what this company can do. Other recent moves show off what it’s willing to do in pursuit of those results. There’s a lot to like about The Trade Desk, and that’s why I’m bullish on this daring maverick of an advertising operation.
The Trade Desk’s last year in share prices shows a company with quite a bit of volatility. Much of February 2021 was a downer for The Trade Desk as it lost nearly a third of its share value in about two weeks’ time.
Attempts to recover to $90 were stymied through both March and April. May brought another drop as the share price slumped to just under $49 per share. By June’s end, however, the company nearly breached $80 per share. By early August, it was challenging $90. A bit of a retracement followed, and the company spent months around $80 per share.
November, however, saw the company spike from around $68 to over $111 in the space of about two weeks. This peak didn’t hold. By the end of January 2022, it was back around the $60 mark once more. A recent recovery gave the company new life to let it challenge and briefly break $80 once more.
The Trade Desk’s earnings report gave the stock a boost in after-hours trading on Tuesday, though it turned negative today. The company reported earnings of $0.42 per share, which readily beat projections calling for $0.28 per share. Revenue also beat forecasts, as well as the previous year’s figures. The company posted $836 million in revenue for 2020, and in 2021, it posted ~$1.197 billion.
Wall Street’s Take
Turning to Wall Street, The Trade Desk has a Moderate Buy consensus rating. That’s based on four Buys and two Holds assigned in the past three months. The average Trade Desk price target of $99.60 implies 32.2% upside potential.
Analyst price targets range from a low of $68 per share to a high of $115 per share.
Credit for Sheer Audacity
The Trade Desk has a rather novel platform on its side. It works to provide digital advertising for its customers, and given the numbers for digital advertising, this is a growth industry. Just in the United States last year, digital spending worked out to be $153 billion.
That represented about 54% of all advertising purchased in the US. Current projections suggest that, by 2024, digital advertising could be a $460 billion industry.
What’s especially impressive about The Trade Desk, however, is the sheer audacity of its operation. Just days ago, the company rolled out a platform called OpenPath. OpenPath basically looks to connect advertisers directly to clients, which actually bypasses the standard procedure of going through Google (GOOG) for advertising.
This will no doubt come as a welcome development for many advertisers out there, especially those who have been burned in the past by Google’s ever-shifting algorithm.
Already, we’ve seen some fairly major players get involved with The Trade Desk. Just yesterday, Walgreens Advertising Group announced plans to offer self-serve campaigns supported by The Trade Desk’s operations. Walmart (WMT) partnered with The Trade Desk last year as part of its own advertising initiatives. Further, the company refreshed its C-suite just days ago, bringing new life to its upper echelons.
Granted, The Trade Desk’s dividend history isn’t a positive on its part. Given that it doesn’t exist, it’s not much of anything on its part. Still, there’s substantial potential for growth here. With the company trading much closer to its lowest price targets than its high, or even average, targets, the likelihood of the company gaining ground from here is hard to overlook.
Concluding Views
You have to give The Trade Desk credit for its boldness. Trying to circumvent the Google stranglehold on the digital advertising market is likely to win it a lot of friends, especially in the digital media sector.
We’ve seen companies like Buzzfeed (BZFD) struggle in recent months, trying to keep advertising dollars coming in. YouTubers have long known the struggle of Google as a platform; remember the Adpocalypse and its demands on content?
A serious alternative to Google will likely be welcomed on several fronts, and The Trade Desk could be right at the forefront of such a move. Granted, most of its potential is just that—potential–, but if this pays off, it could pay off big.
With the company currently trading near its lowest targets, it looks like a solid buy-in point in progress. I’m bullish on The Trade Desk for what this company might represent in the digital media space: a serious Google competitor.
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