Digital advertising has quickly become one of the largest line items for businesses as they prepare their marketing budgets. With consumers devoting more time to their devices than ever before and a seemingly endless amount of data available to help companies create ads that target specific markets, firms are fully focused on taking advantage of these new trends. Although the pandemic has temporarily slowed down ad spending for the majority of companies, there is still a lot of bullish sentiment surrounding businesses that offer digital advertising services.
The perfect example is a company like The Trade Desk (NASDAQ:TTD), which offers cutting-edge technology for advertisers that are looking to create digital campaigns. Although it’s a company with revenues that have been impacted by the pandemic, there’s a lot of things for investors to be excited about going forward. Its been one of the big winners in the market this year and the stock is up over 240% since hitting its March lows. Here are some of the ways that The Trade Desk is changing the way that companies advertise and why it’s a stock that is worth a look for your portfolio.
Changing the Art of Advertising
The best businesses are those that recognize a pain point for their customers and deliver a straightforward way to solve it. That’s exactly what makes The Trade Desk such a compelling investment. There was a time not too long ago when marketers were limited to options like newspapers, radio, and television for advertising. They were essentially forced to choose a specific media channel and hope that their campaign would reach their desired audience. Now, with numerous digital advertising channels and advanced data analytics, marketers can strategically target who they want their ads to reach with more control and efficiency.
The Trade Desk offers a cloud-based platform that allows marketers to create, manage, and optimize digital advertising campaigns on a variety of different digital media formats. It helps advertisers use advanced data to get the most return on their investment for every single ad that they create. The great thing about its platform is that it can help literally every business that is looking to sell its products or services. Programmatic advertising, or the automated buying and selling of online advertising, is here to stay and The Trade Desk is a true industry leader in the space.
Q2 Earnings Show Signs of Ad Spend Recovery
Data-driven advertising is undoubtedly the future of marketing, and The Trade Desk is at the forefront. With that said, the pandemic certainly hurt the company’s Q1 and Q2 earnings numbers as global ad-spending dramatically decreased. This led the company’s Q2 revenue to drop 13% year-over-year and Q2 EBTIDA to significantly drop off as well. However, these declines were anticipated, and the company was actually able to beat Q2 top and bottom line analyst estimates. The real story here is management’s outlook for the remainder of the year and signs of a recovery in ad spending.
Investors were pleased to learn that ad spending on The Trade Desk’s platform bottomed out in mid-April but has been increasing every single month since then. Customer retention remained over 95% during Q2, which is another positive highlight for the business that confirms the longevity of its customer relationships. Management anticipates Q3 revenue growth of 8-10% on a year-over-year basis if there are no major COVID-19 related setbacks. This means that Q4 and 2021 should see the company return to the revenue growth and margin expansion that have continued to drive its stock price higher.
Digital Connected TV
CTV, or Connected TV, is one of the more intriguing advertising channels on The Trade Desk’s platform. With so many people moving to streaming services, more and more advertisers are turning to The Trade Desk to make their way onto television screens in the CTV age. The company has been strategically partnering up with major streaming companies like Hulu, Disney+, NBC, and ESPN to provide its ad buyers with the ability to get their targeted ads onto people’s smart TVs.
CTV is one of the most exciting growth drivers for The Trade Desk going forward and the company recognizes just how big of an opportunity it is. In Q2, Connected TV Spend for The Trade Desk grew about 40% year-over-year. As more and more people cut the cord on cable and switch to streaming services, the demand for targeted advertising with The Trade Desk will only continue to grow.
Everything You Want in a Growth Stock
The Trade Desk is changing the way that digital advertising works. Its cloud-based platform has worldwide demand, it’s already a profitable company, and the demand for digital advertising is only going to increase in the coming years. Although ad spending is down due to the pandemic, there’s still so much to like about this stock. If tech stocks start to pull back in the coming weeks, The Trade Desk is absolutely worth a look for your portfolio. 7 Stocks That are Ready For a Santa Claus Rally
With the end of the year approaching, many investors are looking to rebalance their portfolios. That typically means casting a critical eye at some of your strong performers and making a decision on whether they will move higher. And one thing that can dip the balance in favor of retaining a stock is the likelihood of a Santa Claus rally.
The technical definition of a Santa Claus rally is a rally that starts in the last few trading days of the year after the Christmas holiday. In recent years, however, that definition has been expanded to take into account a December rally. And with Black Friday beginning earlier and earlier and really not ending until after the holiday's end, this makes some sense.
So will there be a rally in 2021? I wouldn’t bet against it. The market continues to want to move higher and January is historically a strong month for stocks. With that said, we believe quality should still matter. Here are seven stocks that stand to benefit with or without a Santa Claus rally.View the "7 Stocks That are Ready For a Santa Claus Rally"