Digital advertising platform The Trade Desk NASDAQ: TTD is exhibiting a potentially constructive formation after a big move in November.
After jumping sharply higher, many stocks move sideways as big institutions hold their newly purchased shares without making big additions. That's exactly what The Trade Desk is doing now.
The Ventura, California company offers a cloud-based platform allowing ad buyers. The company’s clients can create and manage digital advertising campaigns. Clients can optimize their campaigns across various channels, such as audio, video, in-app, social media, and others.
The stock went into a correction earlier this year after Google and Apple announced they would no longer be allowing cookies on their ad platforms.
However, any young nimble growth company like The Trade Desk won’t just give up and fly the white flag. The company developed a proprietary system it calls Unified ID 2.0.
This new platform uses anonymized data to help advertisers create a portrait of the customer they want to target.
Strong results in the last quarterly report helped vault the stock out of a correction that got started in January. The stock fell to a structured low of $46.71 on May 11, which re-set the stock’s base count. It may seem counterintuitive, but those new structure lows can set the stage for fresh money to come in at a lower valuation. That’s true for both value stocks and growth stocks like The Trade Desk.
The stock chopped around until August 10, when it attempted a rally but hit resistance at $90.
From there, it formed a cup-shaped pattern, which it cleared on November 9, the day after The Trade Desk’s third-quarter report, which topped Wall Street views, according to MarketBeat data.
Topping Wall Street Views
The company earned $0.18 per share on revenue of $301.1 million, year-over-year increases of 38% and 39%, respectively.
Analysts had forecast earnings of $0.15 on revenue of $283.93 million. The company topped earnings and sales views in each of the past eight quarters.
MarketBeat analyst views show a rating of a “buy,” with a price target of $97.63, a 4.24% downside. That downside target is not particularly alarming, given that the stock is currently trading just below $100, and holding about 3% above its 21-day moving average.
In the most recent earnings call, CEO Jeff Green outlined highlights from the quarter.
- Video, excluding Connected TV, accounted for nearly 40% of the business, the highest ratio ever.
- CTV growth is not just in the U.S. The spending grew more rapidly in Europe, the Middle East, and Africa than in any other region
- In Q3, international growth outpaced domestic growth, a trend the company expects to continue over the long term.
- In August, Walmart launched its demand-side advertising platform, Walmart DSP, in conjunction with The Trade Desk.
- Unified ID continued its strong industrywide momentum and is reaching a critical scale in the market.
- The Trade Desk’s mobile business continues to be resilient. “As we predicted, the most recent iOS changes have had no material impact on our business, and we expect that to remain the case,” Green said.
The fundamental and technical stories for The Trade Desk diverged for much of this year. Earnings and revenue have been growing at double- or triple-digit rates recently, with the only exception being the second quarter of 2020 when earnings declined 10% and revenue declined 13%.
Double-Digit Growth Ahead?
For the full year of 2021, analysts expect The Trade Desk to earn $0.78 per share, a 13% increase. Next year, that’s expected to rise another 17%, to $0.91 per share. Both those estimates were revised higher recently.
Despite the lengthy correction this year, the stock is up 29.19% year-to-date, entirely due to a 38% gain in November.
Wednesday, the stock kicked off the month of December with downside trade, following a gap higher at the open. Continued support above the 21-day average may signal that the stock remains in the buy range.
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