The Trade Desk Stock Plunges 27% – What Went Wrong?

• The Trade Desk, Inc. (TTD) saw its stock plummet over 27% after missing Q4 revenue expectations with $741 million against the $758.9 million consensus, despite beating EPS by $0.02.
• The company reported strong annual performance with $2.4 billion in revenue, a 26% year-over-year growth, and maintained a customer retention rate above 95% for the eleventh year in a row.
• Looking ahead, The Trade Desk provided a Q1 revenue guidance of at least $575 million, below the consensus of $582.21 million, with an Adjusted EBITDA forecast of $145 million, reflecting cautious optimism amidst recent underperformance.

The Trade Desk, Inc. (TTD) experienced a significant downturn in its stock price, dropping more than 27% to $88.92 in after-hours trading on Wednesday, despite beating earnings per share expectations by $0.02. The company reported an EPS of $0.59, excluding non-recurring items, against a consensus of $0.57, but it fell short on revenue, posting $741 million compared to the expected $758.9 million, marking a 22.3% year-over-year increase. This revenue shortfall, combined with a first-quarter revenue guidance of at least $575 million, below the consensus of $582.21 million, contributed to investor disappointment.

Despite the revenue miss, The Trade Desk maintained an impressive customer retention rate of over 95% for the eleventh consecutive year, showcasing the platform’s strong market position and client loyalty. The company’s full-year performance was robust, with revenues hitting $2.4 billion, a 26% increase from the previous year, and a record $12 billion in spend on its platform. This growth reflects The Trade Desk’s continued dominance in the programmatic advertising space, outpacing many digital advertising segments.

CEO Jeff Green expressed pride in the company’s overall performance, particularly highlighting the significant profitability and cash flow achieved in 2024. However, he acknowledged the fourth-quarter revenue did not meet internal expectations, which likely contributed to the sharp decline in stock price. Looking forward, with an Adjusted EBITDA forecast of approximately $145 million for Q1, The Trade Desk aims to maintain profitability even as it navigates through revenue challenges. This balance between growth, profitability, and the need to meet or exceed market expectations will be crucial for The Trade Desk as it moves forward in a highly competitive and evolving digital advertising landscape.

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