Should Investors Buy the Dip in Trade Desk?

NASDAQ: TTD | The Trade Desk, Inc. -  News, Ratings, and Charts

TTD – The Trade Desk’s (TTD) stock declined more than 25% in a single day following the company’s latest earnings report. Because the stock dipped 50% below its yearly high, it could be a fantastic buying opportunity for investors who have been patiently waiting on the sidelines. So, is TTD worthy of their investing dollars now that it is available at a considerable discount? Read on for an answer.

Trade Desk (TTD) has been in the news of late. The stock declined more than 25% in a single day following the company’s latest earnings report. The question is whether investors overreacted or whether the recent drop is justified?

TDD’s latest earnings report revealed the company has achieved nearly 40% year-over-year revenue growth. But unlike most other tech companies, TTD has zero debt. TTD is also in a favorable position because it has just less than  $680 million in cash and investments on hand.

TTD’s stock dipped 50% below its yearly high, meaning this could be a fantastic buying opportunity for investors who have been patiently waiting on the sidelines. So, is now the time to pick up shares of the advertising  platform company’s shares at an attractive price?  We answer this question below.

Click here to check out our Software Industry Report for 2021

TTD Background and Points of Note

The Trade Desk operates a self-service platform that enables ad buyers to purchase and manage data-driven digital advertising campaigns using their own teams in the United States, Europe, Asia, and Australia. Its platform allows clients to manage integrated advertising campaigns in various advertising formats, including display, video and social, and on a multitude of devices, including computers, mobile devices and connected TV.

TTD makes money through its cloud-based platform that empowers ad buyers to make the most of their limited marketing budget. In short, TTD facilitates much easier display of clients’ strategic advertisements to target audiences.

The comp any is still trading at an 85.54 forward P/E ratio. This is an elevated ratio, especially because TTD recently suffered a considerable decline following its latest earnings report. However, TTD executives provided strong guidance for the coming quarter. Company executives also announced a 10 for 1 stock split. The positive news didn’t impress investors because expectations for TTD were sky-high after shares soared 300% in the prior year when money poured into advertising technology.

TTD has a 2.47 beta, meaning it will likely prove volatile as the market continues to fluctuate. Though there is certainly the potential for the market to settle down in the months ahead as some semblance of normalcy returns, there is also a good chance the market roller coaster continues until the pandemic comes to a complete end.

TTD According to the Analysts

The analysts are not bullish on TTD. If the stock meets analysts’ expectations in terms of the average target price, it will have declined by more than 2%. If analysts are not bullish on TTD, there is no reason one should establish a position in the stock. However, analysts might change their tune if TTD continues to decline following its latest earnings report. So, one should keep a close eye on the analysts’ predictions for TTD moving forward and adjust one’s perspective in accordance with those updates.

TTD POWR Ratings

TTD has Bs in the Quality and Growth components of the POWR RatingsClick here to learn more about how TTD fares in the remainder of the POWR Ratings components.

Though TTD’s B component grades noted above indicate the stock has some merit as a potential investment, TTD has an overall POWR Rating grade of C. The stock’s POWR Rating Stability and Value components have D grades because of its recent post-earnings retreat.

To provide investors with more context, we must gauge TTD’s merit compared to other the stocks in the D-rated Software – Application space. TTD is ranked 45th of 125 stocks in this segment. Investors can learn more about stocks in the Software – Application space by clicking here.

The bottom line

TTD has a C POWR Rating grade, meaning it is a Hold. Scooping up shares of a stock with a C POWR Ratings grade does not make sense when stocks with A and B POWR Ratings grades are available. TTD’s D Stability POWR Ratings component grade is especially concerning. So, we think investors should not invest in TTD until the stock’s rating improve to a B or A overall POWR Rating grade along with at least a C or B Stability component grade.

Click here to check out our Software Industry Report for 2021


TTD shares were trading at $517.10 per share on Friday morning, up $23.60 (+4.78%). Year-to-date, TTD has declined -35.44%, versus a 11.46% rise in the benchmark S&P 500 index during the same period.


About the Author: Patrick Ryan


Patrick Ryan has more than a dozen years of investing experience with a focus on information technology, consumer and entertainment sectors. In addition to working for StockNews, Patrick has also written for Wealth Authority and Fallon Wealth Management. More...


More Resources for the Stocks in this Article

TickerPOWR RatingIndustry RankRank in Industry
TTDGet RatingGet RatingGet Rating

Most Popular Stories on StockNews.com


:  |  News, Ratings, and Charts

Why Do Most Investors Fail?

Most individual investors underperform the stock market (SPY). Sadly 85% of mutual fund managers also come up short of the mark. So what does work? Quant investing which now makes up more than 50% of daily trading activity. However, these method seem out of reach for most investors. That is all about to change as I will show 5 ways to apply quant investing models to help you beat the market going forward. Read on for more...

:  |  News, Ratings, and Charts

3 Dividend-Paying Healthcare Stocks Thriving With Lower Rates

Investors should consider adding dividend-paying stocks in the healthcare sector to their portfolios given the drop in rates and rising coronavirus concerns. 3 of the top dividend-paying healthcare stocks are Johnson & Johnson (JNJ), AbbVie Inc. (ABBV), and Unitedhealth Group (UNH).   

:  |  News, Ratings, and Charts

Will the Stock Market Bounce Back Last?

Last Monday, the major benchmarks suffered their worst declines of the year. The rising case count for COVID-19, primarily driven by the highly contagious Delta variant, led to the most significant drop in two months for the S&P 500 (SPY) and Nasdaq. It also sent Treasury yields to their most significant decline in over three months. But the market bounced back on Tuesday as investors reconsidered their worries as hospitalizations and deaths are not at the same level they were during the height of the pandemic. The question is, was last week's rally a temporary move higher, or are the rising cases a much larger cause for concern. I will answer that question and give my outlook below, but first, let's recap the week in the markets. Read on below…

:  |  News, Ratings, and Charts

Scathing Allegations Should Make Investors Nervous About Coinbase

Cathie Wood might like Coinbase (COIN) stock, but informed investors should be cautious as a class-action lawsuit pokes holes in Coinbase's reputation.

:  |  News, Ratings, and Charts

Will the Stock Market Bounce Back Last?

Last Monday, the major benchmarks suffered their worst declines of the year. The rising case count for COVID-19, primarily driven by the highly contagious Delta variant, led to the most significant drop in two months for the S&P 500 (SPY) and Nasdaq. It also sent Treasury yields to their most significant decline in over three months. But the market bounced back on Tuesday as investors reconsidered their worries as hospitalizations and deaths are not at the same level they were during the height of the pandemic. The question is, was last week's rally a temporary move higher, or are the rising cases a much larger cause for concern. I will answer that question and give my outlook below, but first, let's recap the week in the markets. Read on below…

Read More Stories

More The Trade Desk, Inc. - (TTD) News View All

Event/Date Symbol News Detail Start Price End Price Change POWR Rating
Loading, please wait...
View All TTD News