Trade Desk Stock Is Getting Cheap
MarketBeat.com | Sep 29, 2021 07:30AM ET
Digital adtech platform Trade Desk (NASDAQ:TTD) stock has been selling off since peaking at $97.28 post-10-for-1 stock split as the pandemic spawned a digital advertising surge. With the reopening trend accelerating due to the spread of COVID-19 vaccinations, advertisers are stepping up marketing efforts to woo consumers. This falls right into the Trade Desk’s core strategy.
The Company is a leader in connected TV (CTV) digital advertising as its platform enables advertisers to specifically target exactly the demographic they are seeking across digital channels utilizing data analytics and artificial intelligence. The launch of its latest platform, Solimar, has been received fantastically, which bodes well for upcoming earnings momentum.
The Company was a pandemic winner but is evolving as a post-pandemic grower as streaming services underscore the CTV movement which properly tracks engagement due to its interactive nature. Prudent investors seeking a reopening play that can continue to grow in the new normal can watch for opportunistic pullbacks in shares of The Trade Desk.
h2 Q2 FY 2021 Earnings Release /h2On Aug. 9, 2021, Trade Desk released its fiscal second-quarter 2021 results for the quarter ending June 2021. The Company reported an earnings-per-share (EPS) profits of $0.18 beating analyst estimates for $0.13 by $0.05. Revenue rose 100.9% year-over-year (YoY) to $279.97 million, beating analyst estimates for $262.82 million. Customer retention remained above 95% for the quarter, as it has for the past seven years.
Trade Desk CEO Jeff Green commented,
h2 Raised Guidance Estimates/h2“Revenue more than doubled year-over-year to $280 million in the second quarter. Our growth speaks to The Trade Desk’s position as the default DSP for the open internet. Nowhere is this more apparent than in Connected TV, as more premium streaming inventory becomes available to meet growing marketer demand for data-driven TV advertising.
"From a customer perspective, more of the world’s leading brands, and their agencies, joined our platform, or expanded their relationship with us. This, and our robust international growth in the second quarter, gives us tremendous optimism moving forward. We also recently launched our new trading platform, Solimar, the biggest product launch in our company’s history. Solimar allows advertisers to take advantage of many opportunities in front of them today, with features such as simple and secure onboarding of first-party data; the industry’s most advanced cross-channel measurement marketplace; and advanced, multi-level goal-setting which allows our KOA AI technology to optimize campaigns for the trader.”
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The Trade Desk raised its guidance for Q3 2021 revenues to come in at least at $282 million versus $274.75 million consensus analyst estimates. The Company sees adjusted EBITDA of $100 million compared to $88.6 million analyst estimates.
h2 Conference Call Takeaways/h2CEO Green set the tone,
h2 CTV Growth Driver/h2“Our performance this quarter and year-to-date has led by CTV and premium video. The move from broadcast and cable to digital on-demand content is happening all over the world. While each major media market and nation has different dynamics impacting the adoption rates, every major market in the world is heading towards consumption of premium TV and movie content over the internet. Because of our products, including our new platform, Solimar, our objectivity and market shifts, CTV as a percentage of our business continues to grow very rapidly and is by far our fastest growing channel.
"Heading into the pandemic, our CTV growth had been driven by our leading position in the U.S. and Australia, and we continue to enjoy outsized growth in these markets. But now we're starting to see our CTV strategy scale more broadly around the world. For example, our CTV revenue in Europe was up more than tenfold in the second quarter. I'll expand on this in a moment, but I could not be more optimistic about our CTV business.
"Overall, we fired on all cylinders in the second quarter in large part because we realized the value of the investments we have made in our business over the last few years. Just as important, these investments leave us very strongly positioned for growth moving forward and of course we continue to invest. Our latest platform launch, Solimar, is the result of more than two years of engineering work and it addresses many of the opportunities in front of agencies and brands today. I'll touch on this in a minute too.
"In order to provide some more color on these results and our optimism for the future, I'd like to focus on three key areas. First is our strength in CTV. Even as our overall business doubled over the second quarter last year, our CTV business significantly outpaced that growth and I'd like to spend a moment on the various factors driving our progress there.”
CEO Green elaborated on its CTV growth driver,
“Just to provide some context on our growth in CTV through just the first half of this year, the number of brands spending more than $1 million in CTV on our platform has already more than doubled year-over-year. And it's not just larger advertisers that are taking advantage of CTV anymore.
"The number of advertisers spending over $100,000 has also doubled. In total, we have nearly 10,000 CTV advertisers on our platform, up over 50% compared to last year. Large and medium sized advertisers alike are turning to us as the objective DSP for all digital media, but especially CTV and premium video. That exponential growth speaks to how rapidly the TV landscape is evolving.
"We've spoken before about the accelerated consumer shift to digital video, including CTV, and that shows no signs of slowing down. In fact, we have reached more households via CTV in the U.S. today than our reachable through linear TV. Today we reached more than 87 million households. Those trends are now well established. What is perhaps a little less appreciated is what's happening on the inventory side of TV and how advertiser demand for that inventory is also fueling the shift to CTV.”
Using the rifle charts on the weekly and daily time frames provides a precision near-term view of the playing field for TTD shares. The weekly rifle charts show a make or break as a breakdown was eminent until shares coiled back to the flat 5-period and 15-period moving averages (MAs) at $76.12 and $76.53, respectively.
The weekly rifle chart peaked off the $89.65 Fibonacci (fib) level to trigger the market structure high (MSH) under $79.61. The daily rifle charts are struggling to trigger the market structure low (MSL) buy on a breakout above the $73.83. The daily rifle charts have a stochastic mini pup as the daily 5-period MA attempts to rise at $74.06. The daily upper BBs sit at $74.06.
Prudent investors can watch for opportunistic pullback levels at the $73.81 fib, $70.43 fib, $67.05 fib, $66.40 fib, $62.23 fib, and the $59.37 fib. The upside trajectories range from the $89.66 fib up to the $102.45 fib.
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