Stocks experiencing a 50% drop, identified as potential buys
Rewritten Article:
Worth Investing in? The Trade Desk's Stock Drops Big Time!
Take a gander at The Trade Desk's (TTD -5.13%) fourth-quarter outcomes, and some investors couldn't resist the urge to hit the sell button. For the first time since it went public in 2016, this digital advertising whiz kid missed Wall Street's consensus revenue target. The stock took a tumble, losing a whopping 33% the following day, annihilating a year's worth of market-beating gains. As of now, The Trade Desk's shares are down an astonishing 50% from their all-time high.
Get Ready to Snatch Up a Bargain!
In my book, that's a bloomin' invitation to grab this top-notch growth stock. It's still not cheap, trading at 90x trailing earnings and 14x sales. But that's quite reasonable compared to recent peak levels, where P/E ratios soared above 200, and P/S figures peaked above 30. From a historical perspective, The Trade Desk's shares are quite the steal right now.
And let's not forget about the company's awe-inspiring growth potential. Remember the 2022 inflation crisis that led to a bear market? The Trade Desk's stock dipped with the market, but you wouldn't have guessed by looking at its business results. As the graph below demonstrates, The Trade Desk's sales growth hardly shows a slowdown, while its profit margins continued to climb steadily:
TTD Revenue (TTM) data by YCharts. TTM = trailing 12 months.
A 15-Step Recovery Strategy
So, The Trade Desk's annual free cash flows have more than doubled in four years, while revenues have nearly tripled. The stock has shed 12% of its value over the same period.
Yes, The Trade Desk underwhelmed investors with sluggish sales growth and conservative forward-looking guidance in the latest earnings report. The dramatic market reaction seems a bit off, though. The rare revenue miss was a 22.3% year-over-year revenue increase, just falling short of a 25.2% growth target.
management took the right approach. CFO Laura Schenkein took full responsibility for the revenue miss during the Q4 earnings call. It wasn't a missed opportunity, but a period of relatively weak execution. To kick things into higher gear and address the slowdown, The Trade Desk outlined a comprehensive, 15-step recovery plan. Key action items include forming partnerships, delving into audio ads, bolstering the sales department, and refining the product development process.
The Trade Desk isn't resting on its laurels. The company is taking decisive action to turn things around.
Paying Top Dollar for an Exceptional Company
I can't promise that The Trade Desk's challenges will fade away in 2025, and some would argue that the stock remains too expensive even now. But you're paying a premium for a high-octane growth stock. This one earns an extra gold star for its positive earnings and cash flows — many businesses with a foot on the gas pedal tend to rack up bottom-line losses until they're ready to coast on profits.
The Trade Desk is growing rapidly and making a profit at the same time. This combination alone deserves a significant price premium. Moreover, the company remains an innovator in the digital advertising technology space. Its Unified ID 2.0 (or UID2) standard is gaining traction across the industry, helping advertisers and ad-spot sellers prepare for a radically transformed advertising landscape as Google is forced to limit the effectiveness of its ad-tracking services.
So, I'm not afraid to shell out a pretty penny for The Trade Desk's stock. I might look back on the spring of 2025 as the time when this fantastic growth stock was available at a bargain price. This premium growth stock should serve you well in the long run, especially if you jump on board at today's relatively affordable price.
Enrichment: UID2 - The Trade Desk's Future-Proof Digital Advertising Technology
The Trade Desk's Unified ID 2.0 (UID2) is a groundbreaking digital advertising technology designed to tackle issues posed by the deprecation of third-party cookies. UID2 converts first-party data, including email addresses and mobile numbers, into hashed identifiers for targeted advertising while safeguarding user privacy[1][2]. This tech is gaining traction, as companies like Perion Network embrace it to enhance their digital advertising capabilities[1][4].
Key Aspects of UID2:
- Privacy Compliance: UID2 complies with emerging privacy regulations by requiring user consent for data usage[2].
- Open-Source Framework: This facilitates community-driven updates and improvements[2].
- Cross-Site Targeting: Allows for audience targeting across multiple platforms without relying on third-party cookies[2].
Future Prospects
The future looks bright for UID2 as it carves out a significant role in the digital advertising world. Its emphasis on user privacy and open-source nature make it an attractive choice for many advertisers and publishers[2]. Success stories such as Target Australia achieving a 66% higher conversion rate using UID2 further validate its potential[3].
Challenges and Opportunities:
- Adoption Rate: Securing widespread adoption by publishers and advertisers is crucial for UID2's success.
- Competition from Google: Google's own solutions like Google Topics may compete with UID2 for market share.
- Regulatory Environment: Continual compliance with privacy regulations will be essential for UID2's longevity[4].
UID2 vs. Google Ad-Tracking Services
Google's ad-tracking services, including Google Topics, are part of its Privacy Sandbox initiative, aiming to replace third-party cookies. Although Google's solutions operate within its ecosystem, UID2 offers a more open and interoperable framework across different platforms. This openness could be a significant advantage for UID2 in attracting a broad range of industry partners[2].
Points of Comparison:
- Interoperability: UID2 is designed for use across multiple platforms, while Google's solutions are more integrated within the Google ecosystem.
- Privacy and Consent: Both UID2 and Google's Privacy Sandbox prioritize user consent and privacy, with UID2 requiring explicit consent for data usage[2].
- Industry Support: UID2 boasts support from a consortium of companies, including The Trade Desk, while Google's solutions are developed internally.
- Despite the drop in The Trade Desk's stock price in 2025, it might be worth considering a purchase, as the company is projected to continue its impressive growth trajectory.
- The Unified ID 2.0 (UID2) technology developed by The Trade Desk is set to revolutionize the digital advertising landscape, with its focus on privacy, open-source framework, and cross-site targeting.
- The future of UID2 appears bright, with potential for wide adoption across the industry, as it addresses the challenges posed by the deprecation of third-party cookies.
- In comparison to Google's ad-tracking services, UID2 offers a more open and interoperable framework that could attract a broader range of industry partners, setting it apart in the digital advertising market.
