Founded during the financial crisis year of 2009, advertising automation platform Trade Desk (NASDAQ:TTD) has survived tough times and prevailed. Along with that, TTD stock traders have endured plenty of ups and downs, yet prospered in the long run.
However, not every investor is 100% satisfied. That’s because the share price has come down since its late-2020 peak.
So, does this mean that Trade Desk has lost its mojo? Is the advertising market abandoning this Digital Age disruptor?
The answer is, absolutely not. As we’ll see, there’s no shortage of data to construct an airtight case favoring an investment in Trade Desk today.
TTD Stock at a Glance
Is TTD stock expensive or cheap? That’s a topic of robust debate, and your response might depend on how you define “expensive.”
Sure, it’s a pricey stock at more than $700 as of mid-March 2021. So, unless you have access to fractional shares, the stock might be difficult to afford if your account size is small.
Yet, let us not confuse pricey with overpriced. TTD stock reached a 52-week high of $972.80 on Dec. 22, 2020, but pulled back quite a bit since then.
On the afternoon of March 19, the share price was hovering near $737. That’s a discount of roughly 24% compared to the 52-week high price.
But ultimately, TTD stock is only a bargain if you feel that the company is doing well, and if it’s involved in a market with growth potential. So, does Trade Desk check all of those boxes?
The Digitization of Media
Even before the onset of the coronavirus pandemic, media was becoming increasingly digitized. Print media was being phased out, and advertisers needed to reach younger, app-addicted audiences.
Of course, in hindsight we now know that the Covid-19 pandemic only accelerated the trend toward media digitization. As it turns out, Trade Desk was a pioneer in facilitating this transition.
Rather than try to explain exactly whom the Trade Desk platform serves, I’ll let the company do the talking:
“Our clients are the advertising agencies and other service providers for advertisers, with whom we enter into ongoing master services agreements, or MSAs. We generate revenue by charging our clients a platform fee based on a percentage of a client’s total spend on advertising, data and other features through our platform.”
Thus, Trade Desk provides a self-service technology platform for buyers of advertising. Reportedly, the clients are able to pick and choose from more than 500 billion digital ad opportunities per day.
The company asserts that it’s an enabler, not a disruptor. However, I feel that Trade Desk is being too modest here. As advertisers endeavor to streamline and target their digital ad spend, Trade Desk has truly become a first-call platform in a hyper-growth market.
Show Me the Data
That’s all fine and good, but the skeptics might wonder whether digital ad facilitation translates into a firm financial bottom line.
Trade Desk’s recently released fiscal data ought to promptly put that debate to rest. Here are some of the highlights:
- Customer retention remained over 95% throughout Trade Desk’s fourth fiscal quarter
- Record ad spend of $4.2 billion on the company’s platform for full-year 2020
- Fourth-quarter GAAP revenues of $319.9 million, marking a 48% year-over-year increase
- Non-GAAP adjusted EBITDA of $152.9 million, along with non-GAAP adjusted EBITDA margin of 48%
Particularly noteworthy is Trade Desk’s customer retention, which is key to the company’s continued success in the field.
It is indeed notable that Trade Desk’s quarterly customer retention rate has exceeded 95% for the past six years.
The Takeaway
As you can see, Trade Desk is earning revenues and retaining clients during this pivotal juncture of the Digital Age.
And if the TTD stock price came down from its peak, that’s no reason to abandon a perfectly good investment in media digitization trailblazer.
On the date of publication, neither Louis Navellier nor the InvestorPlace Research Staff member primarily responsible for this article held (either directly or indirectly) any positions in the securities mentioned in this article.
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