Shares of advertising-technology (adtech) company The Trade Desk (NASDAQ: TTD) got smashed on Thursday after the company reported financial results for the fourth quarter of 2024. As of 10 a.m. ET, The Trade Desk stock was down a staggering 31% and it suddenly finds itself down 40% from its 52-week high.
In Q4, The Trade Desk’s revenue of $741 million came in below management’s guidance and analysts’ expectations, which is rare for this company. Founder and CEO Jeff Green highlighted the company’s successes during the year but conceded that he was “Disappointed that we fell short of our own expectations in the fourth quarter.”
The Trade Desk’s forward guidance is also coming into play today. In Q4, its revenue was up by 22% year over year. But it’s guiding for revenue of at least $575 million in the upcoming first quarter of 2025. That’s only 17% growth from the first quarter of 2024.
In short, The Trade Desk’s growth is decelerating despite its leadership position in the connected TV adtech space. And that has its base of growth investors concerned.
Even with the 40% drop from its highs, The Trade Desk stock is up more than 2,600% over the last 10 years. But the ride hasn’t been smooth. As the chart below shows, it’s dropped 40% or more several times.
Even after the drop in price, The Trade Desk stock trades at a pricey 17 times sales. Its sales growth is slowing, which is concerning, especially considering it’s slowing faster than management expected. That said, the company estimates its market opportunity at over $900 billion, which represents significant upside opportunity. And its guidance for 17% growth in Q1 is nothing to sneeze at.
I’m not saying it’s a bargain today or that there is nothing to worry about. But I am saying that The Trade Desk is a remarkably consistent company and has been down before, meaning it warrants closer consideration from investors after today’s drop.
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