David vs. Goliath in Adtech ($TTD (-5,03%) vs. $ZETA (-11,1%) )
Advertising is an interesting space, it’s constantly changing, evolving. The old guard of TV and print is shrinking, and the new battlefield is digital — data, targeting, personalization. That’s where companies like The Trade Desk and Zeta come in. Both are in the same arena, both talk about the future of adtech, but they couldn’t be more different in size and perception. It’s the “legacy disruptor” against the young gun.
The Trade Desk is the undisputed heavyweight. With a market cap north of $20 billion, it has become the go-to platform for digital advertising. The business is highly profitable, founder-led by Jeff Green, and has delivered growth quarter after quarter. However, the last months haven’t been easy for the company. The stock is down more than 60% YTD, due to disappointing earnings results and investors’ perception of Trade Desk losing ground. Funnily enough, it was once seen as Google’s new competitor, disrupting the ad industry. Now there doesn’t seem to be much of that dream left. The stock is trading at a forward EV/revenue of around 7, which seems reasonable considering 17% projected top-line growth annually over the next few years and a 26% FCF margin. Certainly, a company to watch closely.
Zeta, by contrast, is the underdog. At just a fraction of TTD’s size, it has been flying under the radar for a long time, but that’s changing right now. Their platform is all about AI-driven consumer intelligence and omnichannel marketing, promising advertisers more precise targeting with first-party data. Numbers back it up: Zeta has been growing fast (>25% past and projected), nearing profitability, and still trades at a forward EV/revenue between 3–4, far below Trade Desk. Of course, the risks are higher: smaller scale, less proven, and more vulnerable in a downturn. Also, the stock has had quite a solid run already this year. Nevertheless, Zeta is still cheap and if they can keep up these remarkable growth numbers, I don’t see why the rally couldn’t continue.
For me, I am looking at both. I owned Zeta before in my previous portfolio and really liked it, however I was hesitant to re-commit after the steep increase. Trade Desk is the safer, dominant player, and attractively valued compared to historical averages. Zeta is higher risk, higher reward, its valuation is cheap, but I would still prefer buying the dip on this one. In advertising, where data is everything and the future will be defined by who owns the best insights, both have their place.
