The Trade Desk ($TTD (-3,92%) ) is one of the leading providers of programmatic advertising and one of the few alternatives to the advertising platforms of Google $GOOGL (+1,8%) and Meta $META (+0,46%) . However, after the last quarterly figures, the share suffered a massive slump. Is this an exaggerated market reaction - or are difficult times ahead for the company?
What has happened? Quarterly figures cause share price to slide
The Q4 figures for 2024 disappointed investors' high expectations and led to a significant fall in the share price:
✅ Sales growth of 23% - solid, but lower than expected by analysts.
⚠️ Cautious outlook for 2025 - Continued pressure on advertising budgets.
⚠️ Increasing competition and regulatory uncertainties are weighing on the market environment.
The weaker outlook for 2025 in particular caused uncertainty. But was the slump exaggerated?
The business model of The Trade Desk
The Trade Desk is a demand-side platform (DSP) that offers advertisers an independent and data-driven solution for digital advertising - outside the walled gardens of Google, Meta and Amazon.
✅ Independent advertising platform - Full control for advertisers, without dependence on individual networks.
✅ Unified ID 2.0 (cookie-less tracking) - a potential solution for the era after third-party cookies.
✅ Boom in connected TV (CTV) - Increasing advertising expenditure on streaming platforms such as Netflix and Disney+.
✅ AI-supported optimization with "Kokai" - a new platform designed to optimize data-driven campaigns.
Despite the current headwinds, The Trade Desk remains technologically strong.
Competition - Who are the biggest competitors?
🔸 Google Ads & Meta Ads ($GOOGL (+1,8%) )- continue to be the dominant advertising platforms.
🔸 Amazon Advertising
$AMZN (+1,56%) - is growing rapidly in the e-commerce and retail media segment.
🔸 PubMatic
$PUBM
& Magnite $MGNI (+3,89%) - smaller DSPs that want to gain market share.
🔸 Apple & first-party data
$AAPL (+1,23%) - Tighter data protection makes tracking more difficult.
While The Trade Desk continues to play a leading role in programmatic advertising, the pressure from large players remains.
Opportunities - Why could The Trade Desk take off again?
✅ Growth in connected TV (CTV) - Streaming platforms are increasingly focusing on advertising.
✅ Recovery of advertising budgets - with a possible economic stabilization, demand could increase.
✅ Unified ID 2.0 as the new industry standard - if the solution catches on, The Trade Desk could benefit.
✅ Expansion into new markets - Asia and Europe are becoming increasingly important for growth.
Risks - What could slow down The Trade Desk?
⚠️ Weak economy - Continued pressure on advertising budgets could slow growth.
⚠️ Dominance of Google & Meta - they could defend their market share even without third-party cookies.
⚠️ Regulatory uncertainties - Stricter data protection laws could make the business model more difficult.
⚠️ Acceptance of Unified ID 2.0 - if advertisers and publishers remain hesitant, growth could stagnate.
Conclusion - turnaround candidate or too many uncertainties?
The Trade Desk remains a key player in the digital advertising market, but the recent slump shows that expectations were high. The next few quarters will show whether growth will accelerate or whether the economic challenges will weigh more heavily. In particular the development of Unified ID 2.0 and the expansion of Connected TV are crucial.
📊 What do you think? Is the setback a buying opportunity or is the risk still too high?
