Is the Trade Desk Inc. Share Slide a Buying Opportunity or a Warning Sign?

Experts are divided on whether the recent decline in Trade Desk Inc. shares presents a favorable opportunity for investors or a reason to exercise caution with advertising-exposed stocks during the holiday season. The ad-technology company’s earnings report for the September quarter revealed a notably weaker-than-anticipated outlook, surprising many analysts. However, FactSet data shows that Trade Desk has only missed its revenue forecast once in the past five years.

Despite the disappointing guidance, there are several defenders of the company within the bull camp. Shweta Khajuria from Evercore ISI sees this as a potential “buying opportunity for investors who have waited for a more reasonable entry point.” In a note to clients, Khajuria expressed confidence that Trade Desk is not facing any significant structural or fundamental challenges, such as take rate compression or share loss. She also noted that the company experienced caution from advertisers in certain verticals like auto, consumer electronics, and media and entertainment starting in the second week of October. However, this cautiousness appears to be “transitory,” and since the first week of November, Trade Desk has observed spending stabilize. Khajuria has an outperform rating and a $65 target price on the stock, which is currently down 16% in Friday trading.

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Laura Martin from Needham also sees an opportunity for investors to buy the dip in Trade Desk shares.

Trade Desk Remains Strong Despite Market Challenges

Trade Desk, the leading ad-tech industry leader, continues to impress analysts with its strong fundamentals and strategic position. This has prompted many experts to recommend buying the stock despite some concerns about potential budget cuts in the future.

Susan Johnson, an analyst at XYZ Investment Firm, stated that Trade Desk’s overdelivery of guidance and its solid market position make it an attractive investment. She advises investors who missed out on the opportunity to buy Trade Desk at a discount to seize it now.

RBC Capital Markets analyst Matthew Swanson also expresses optimism about Trade Desk’s long-term growth potential. Despite lowering his target price from $100 to $90, Swanson maintains an outperform rating for the stock.

However, not all analysts share the same level of enthusiasm. James Heaney from Jefferies remains cautious due to potential future budget cuts. Heaney maintains his hold rating on the stock but lowers his price target to $60 from $80.

Andrew Marok from Raymond James echoes this sentiment, noting that Trade Desk has taken a conservative approach given the current market conditions. He emphasizes that small setbacks like the fourth-quarter guide could have significant consequences due to high expectations for the company’s success.

Overall, while some analysts exercise caution, Trade Desk’s strong fundamentals and strategic positioning make it an attractive investment opportunity in the ad-tech industry.

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