Ad Tech Giant’s Earnings Report Fails to Impress Investors
Despite posting a solid earnings report, shares of The Trade Desk (NASDAQ: TTD) plummeted 6.9% as of 11:52 a.m. ET on Friday. This significant drop can be attributed to the company’s sky-high valuation, which seemed to overshadow its impressive financial performance.
Revenue Growth and Margin Expansion
The Trade Desk’s revenue surged 27% to $628 million, surpassing the consensus estimate of $619.9 million. Moreover, the company’s investments in its Kokai AI platform upgrade have started to pay off, leading to strong margin expansion on a GAAP basis. Customer retention remained remarkably high, above 95%, continuing a streak that has lasted for 10 years.
Unified ID 2.0 Protocol Gains Traction
The company’s Unified ID 2.0 protocol has been extending its reach, forging partnerships with major players like Roku and Spotify. This development is expected to have a significant impact on the company’s future growth prospects.
Fourth-Quarter Optimism
CEO Jeff Green expressed confidence in the company’s ability to capture a greater share of the $1 trillion advertising market, citing its strong position heading into the fourth quarter and beyond. The company expects revenue to reach at least $756 million, representing a minimum of 25% growth from the same quarter last year.
Long-Term Growth Prospects
While the stock’s price-to-earnings ratio of around 200 based on GAAP earnings may be a concern, The Trade Desk’s latest report suggests that it is well-positioned for long-term growth. However, before investing in the company, it’s essential to consider alternative options that could potentially offer better returns.
Expert Insights
The Motley Fool Stock Advisor analyst team has identified what they believe are the top 10 stocks for investors to buy now, and The Trade Desk didn’t make the cut. These 10 stocks have the potential to produce exceptional returns in the coming years. By following the guidance of experienced analysts, investors can increase their chances of success in the market.
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