Join 34,000+ Traders & Investors by getting our FREE weekly Sunday Cheat Sheet email. Get key market news and events before everyone else. Click Here to See if you Qualify.
The Trade Desk (TTD) is a California-based tech company known for its real-time programmatic marketing automation technologies, products, and services. This article serves to provide a Trade Desk stock forecast for 2022.
TTD is the largest independent demand-side platform in the world and competes with giants like Google’s DoubleClick, Facebook Ads, and many more. It rose to fame during the pandemic when businesses were forced to move online. The highly personalized customer experience provided by TTD helped its customers improve their overall return on investment. But The Trade Desk stock has been underperforming largely since the beginning of this year and has lost close to 24% year-to-date and about 8% in the last month.
These days the market is quite optimistic about the success of TTD stock. This is because digital or online advertising is considered one of the best mechanisms to target customers and is expected to continue to remain so even in the coming times. TTD already has a decent market share. It is continuously focusing on innovating its offerings and might be in a good position to take advantage of multiple opportunities that will come its way in the near future.
Back-To-Back Strong Quarters
The Trade Desk being a leading player in the digital advertising space has witnessed major growth in the last year. The company came up with its fourth quarter and annual financials for 2021 and the market was quite satisfied with them.
The gross average spending on the TTD platform had grown by 47% to reach $6.2 billion and during the year the company was able to generate a revenue of almost $1.2 billion representing a 43% year-over-year growth compared to the 26% revenue growth last year. The company’s adjusted net income also increased by 36% to $456 million and the EBITDA grew to $503 million demonstrating a huge 77% increment. Moreover, an 8% growth in EBITDA margin was also observed.
Upon comparing the last four quarters one can observe the rate of revenue growth has decelerated largely from 101% in the second quarter to 39% and 24% in the subsequent two quarters partly because of tough comparisons against the political ad purchases a year ago and the EBITDA margin had shown only a little movement. The best thing about TTD’s financials is the zero-interest-bearing debt and the fantastic cash, cash equivalents, and short-term investments of $959 million. Further, the free cash flows of the company have also shown tremendous growth and have come at $320 by the end of the fourth quarter thus ensuring a solid liquidity position to the company.
Huge Potential
Traditionally, organizations had to enter into contracts and negotiate each of those with many publisher houses individually for the display of their advertising content. Therefore, advertising used to be a lengthy task. But with the advent of programmatic advertising, organizations can bid for their ad placements. Artificial intelligence (AI) is being used to optimize the advertising budget on all these platforms. As per research by Market Research Future, the global programmatic advertising market is growing at a CAGR of 22% and is expected to reach the $150 billion mark by 2023 thereby indicating there is a huge market opportunity for companies like TTD.
TTD is in a perfect position to reap the benefits of these growing opportunities. It maintains a more or less goal-focused approach with the advertisement buyers and displays advertising on a large array of places like publisher websites, connected TV, as well as social media platforms like TikTok. Its AI engine is widely used by the company to optimize the ad spend in the best possible manner. Moreover, its interface is simple compared to some advertising giants like Google and has many third-party integrations as well.
Additionally, it offers a single unique ID which it uses to monitor the same users across devices and publishers all over the internet. One feature which many users love is the direct access to premium publishers like Conde Nast, Reuters, The Washington Post, BBC.com, USA Today and more. It helps those advertisers to know exactly in which websites their ads are shown thus minimizing the risks of buyers getting duped.
The company has been able to gather a huge consumer base and many people find its services top-notch. Its super retention rate of 95% which it has maintained over the past 8 years speaks volumes about its success and popularity.
Access to Big Data
Data is the new oil and having access to reliable and good quality data can guarantee success for an organization. Firstly, TTD has established a huge network of advertisers and content creators and therefore can provide better quality service than many of its competitors. Moreover, it also gets to collect unique industry data from its huge network which helps it to build business strategies that would resonate well with its consumer base.
Also, data-driven advertising can be path-breaking. Therefore, the company chose to partner with Walmart to launch a new demand-side platform that would provide advertisers with access to unique Walmart shopper data. Besides, in India, it also has partnerships with Samsung-connected TVs for providing direct access to ad placements for skippable TV ads to the advertisers via its free streaming service. Moreover, its partnership with smartphone giant Xiaomi will be giving its advertisers access to a global customer base. Programmatic advertising has just started gaining popularity and has huge prospects.
Fueled by several competitive edges and immense love from the huge base of customers TTD has turned into one of the strongest programmatic advertisers in the world and has the capability to grow even more in the coming days with the growth of the industry. The inherent volatility in its shares does make it a bit risky for faint-hearted investors but for gaining greater rewards in the future undertaking a bit of risk seems absolutely fine. At $68.81 as of March 18, The Trade Desk stock has an upside potential of almost 40% according to the average analyst target of $96.32. Hence, The Trade Desk stock could be a great buy.
This Options Discord Chat is The Real Deal
While the internet is scoured with trading chat rooms, many of which even charge upwards of thousands of dollars to join, this smaller options trading discord chatroom is the real deal and actually providing valuable trade setups, education, and community without the noise and spam of the larger more expensive rooms. With a incredibly low-cost monthly fee, Options Trading Club (click here to see their reviews) requires an application to join ensuring that every member is dedicated and serious about taking their trading to the next level. If you are looking for a change in your trading strategies, then click here to apply for a membership.