Key Takeaways:
Shares of The Trade Desk Inc. (TTD) plunged after the ad-tech firm issued a second-quarter revenue forecast that fell short of Wall Street expectations, fueling concerns about slowing growth and rising competition.
"We reiterate our sell thesis... as revenue decelerates,” said New Street Research Media Analyst Dan Salmon, with reference to the latest demand-side platform results. He added that headwinds from larger brands reevaluating their spending and lower-cost competition remain issues.
The company guided for second-quarter revenue of at least $750 million, below the $771 million consensus estimate compiled by LSEG. For the first quarter ended March 31, The Trade Desk reported adjusted earnings of 28 cents per share, missing profit estimates of 32 cents. First-quarter revenue grew 12% year-over-year to $689 million, which was in line with expectations.
The stock fell nearly 13% in premarket trading following the announcement. Management attributed the soft outlook to broader ad market "headwinds," but analysts pointed to more specific challenges. Salmon highlighted increasing competition from Amazon's (AMZN) demand-side platform as a key factor pressuring The Trade Desk.
The company has long credited its growth to brands shifting ad spending to the "open internet" and away from "walled garden" ecosystems like those of Google (GOOGL) and Meta Platforms (META). Connected TV (CTV) advertising has been a primary driver, representing over half of The Trade Desk's business, according to industry estimates.
The disappointing forecast marks a significant deceleration from the 20% to 30% quarterly gains the company regularly posted in prior periods. Investors will be closely watching for signs of stabilization and a response to competitive pressures in the company's next earnings report.
This article is for informational purposes only and does not constitute investment advice.
