Stock Analysis/Share Presentation ⬇️
Today we are talking about the company The Trade Desk: $TTD (+3.69%)
What is and does The Trade Desk anyway: 🤔
The Trade Desk is a technology company. With its cloud-based self-service platform and ad buyers, the company can create, manage, and optimize data-driven digital advertising campaigns across multiple ad formats and channels including display, video, audio, in-app, native, and social on a variety of devices including computers, mobile devices, and connected TV. The company offers a self-service omnichannel software platform that enables its clients to buy and manage data-driven digital advertising campaigns. The company's platform enables its clients to manage integrated advertising campaigns across multiple advertising channels and formats. The platform's integrations with inventory, data partners, and publishers provide ad buyers with reach and decision-making capabilities, and enterprise application programming interfaces (APIs) enable clients to customize and extend the platform's functionality. The company provides solutions for advertising agencies and other service providers to advertisers.
When was The Trade Desk founded?
The Trade Desk was founded in 2009 in Ventura, California.
How many employees does the company have: 🙋🏽♂️🙋🏻♀️
Currently, The Trade Desk has a total of over 3,000 employees.
P/E RATIO:
The Trade Desk has a current P/E ratio of just under 480, which is very very high in my opinion.
Market capitalization: 🏦
Currently, The Trade Desk has a market capitalization of around 31 billion euros.
Dividend Yield:
The company does not currently pay a dividend to its shareholders.
Strengths of the share: 📈
- The Trade Desk offers a unique and industry-leading programmatic advertising platform.
- The Trade Desk's platform is very user-friendly and offers a wide range of features to optimize campaigns.
- The Trade Desk has an extensive database that allows advertisers to target their audiences in a very granular way.
- The Trade Desk offers a wide range of ad formats and channels, including display, video, audio, mobile and connected TV.
- The Trade Desk has a strong global presence and is able to help advertisers around the world optimize their campaigns.
- The Trade Desk is known for its outstanding customer service and support.
Weaknesses of the stock:📉
- The Trade Desk's platform can be overwhelming for new users due to the variety of features and options.
- Some advertisers have expressed concerns about the data quality and accuracy of The Trade Desk's audience targeting features.
- The Trade Desk has higher costs than some of its competitors, which may make it less attractive to smaller advertisers.
- The Trade Desk's platform may not be suitable for all types of advertisers, particularly those with limited resources or experience in programmatic advertising.
Industry analysis on The Trade Desk:
The Trade Desk operates primarily in the online advertising market, but also brokers traditional print advertising or TV advertising. This market is very cyclical, because in a crisis the first thing to be cut is marketing, as costs can be reduced immediately. This is also reflected in the stock market. The Trade Desk plunged -50% in February 2020, in the midst of the Corona pandemic. However, after it became clear in May 2020 that The Trade Desk would benefit from Corona, the stock shot up just as quickly. The Trade Desk solves the problem of advertising monopolies. Companies like Facebook and Google, because of their size and reach, can set prices that aren't fair. The Trade Desk creates transparency and comparability of advertising space for businesses. The Trade Desk does not sell its own advertising space, but only acts as an intermediary and receives a commission for this.
A little more about the business model: ⬇️
The Trade Desk sells its software primarily to large, global marketing agencies. These marketing agencies serve Coca Cola or McDonald's, for example.
The Trade Desk makes money in two ways:
95% commission: The Trade Desk collects between 5 and 20% commission of the spent marketing budget, depending on the channel used. All costs are reported very transparently and you can even track in detail how each euro spent is divided among all platforms and commissions. This area currently accounts for 95% of sales.5% value-added services (data and analytics tools): Marketing agencies can add additional software packages. These can be additional free data providers or software to evaluate and analyze the data (from The Trade Desk itself). This area is still small, but growing tremendously.The Trade Desk acquires most of its customers through Connected TV, which is video content that is connected to the Internet: SmartTVs, YouTube, video advertising on other websites or livestreaming. The special feature in this area is that the data is measurable, i.e. it can be proven how many people see the advertising and how strongly they react to it, and the online areas are becoming more and more present, while print or TV advertising is losing relevance. In addition, The Trade Desk enables transparency, comparison between different providers and also what happens with every euro invested. So they can quickly prove themselves, because this method is much more efficient. With Connected TV, for a few hundred euros, you can test different advertisements and show each viewer the one that perfectly suits them. All of this can be measured down to the penny. The goal is for the customer to manage his entire advertising budget at The Trade Desk as a result of this "aha" effect. Because that's exactly the problem so far: The Trade Desk has only a few customers. 820 marketing agencies generate 100% of the revenue. Two of them each account for more than 10% of sales. The company is clearly poised for growth as long as it stays true to its principles: Independence, transparency, objectivity of advertising space and prices, and they keep their commission share low, there is still a lot of growth potential here.
In this respect, the business units are also aligned with the growth figures and unfortunately, apart from the share of video advertising (50% of revenues), no details are known about the distribution of revenues. Connected TV has grown by 100% in 2019, and the areas are Smart TV, Hulu, Twitch and YouTube. The Mobile Video channel has grown by 74%, and these are video ads in apps, and for Audio the growth is 60%, and these are podcasts, Spotify and Soundcloud. Two smaller sectors, live video and podcasting, are also seeing growth of over 30%.
Trade Desk's operating system is installed at the client's site and is permanently configured, contains all the data, which campaigns are working, which are not? Which texts, images and video clips generate the most sales? The more data and experiments you have done, the better and more profitable you will be able to place ads in the future. Since this is a platform market, we need to look at both sides.
Buy Side: Buyers of ad space like Coca Cola or McDonalds.
With The Trade Desk, you can reach almost 4 billion people- more than any other platform in the world (reference: Facebook has only 2.2 billion monthly users). It's not important to target only people for whom the topic is relevant, because with numbers like that, they're just probabilities.
Sell Side: sellers of advertising space like YouTube, newspapers, Instagram.
The more buy side buyers there are, the more attractive this market is to me, because I can offer my platform to whoever gives me the most revenue and I can grab more of the advertising budget.
The Trade Desk does not see itself as a competitor to Facebook and Google. They don't sell ad space, they just broker it. But they are the direct contact for all advertisers. In this way, they take away Facebook's and Google's direct access to advertisers.
Goal of The Trade Desk: 🏁
The Trade Desk aims to help advertisers reach their target audiences in a precise and effective way, while creating a high-quality advertising experience for consumers.
Your opinion: 🤔🧐
Now I'd love to hear your thoughts on this stock in the comments.
What do you think of The Trade Desk and did you already know this company?
Do you guys maybe already have this stock in your portfolio?
Feel free to let me know in the comments.
Of course, this is not an investment advice but just my own opinion that I want to share with you.
