Is The Trade Desk Due for a Comeback?
Key Points
The Trade Desk isn't as exciting anymore with 20% revenue growth rates firmly in the rearview mirror.
But its low P/E ratio and respectable fundamentals suggest that it may be a value stock.
The company still has high customer retention, and the recent Roku deal may bring it more attention.
- 10 stocks we like better than The Trade Desk ›
Connected TV stocks were all the rage during the pandemic, but many of these same stocks have crashed from their highs. Roku is getting acquired for $160 per share after almost reaching $500 per share in 2021.
The Trade Desk (NASDAQ: TTD) is a similar story, but without the buyout. The stock is down by more than 50% year to date, and its $18 price tag is a far cry from the $140 per share it hit near the end of 2024.
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The Roku deal has brought more attention to The Trade Desk stock, and its 20.6 P/E ratio makes it worth looking at now. Here's what you should know about the stock.
Image source: Getty Images.
The days of 20% growth rates appear to be over
Part of The Trade Desk's ability to outperform the S&P 500 during its peak was its ability to consistently generate 20% or more year-over-year revenue growth. Investors didn't like it when The Trade Desk indicated that those days were over.
The Trade Desk delivered 12% year-over-year revenue growth in the first quarter, compared to a 25% year-over-year growth rate when it reported earnings for Q1 2025. This fading growth rate is a major area of contention, and Q2 guidance only implied at least $750 million in revenue, which would represent an 8% year-over-year growth rate.
Profit margins also compressed to just below 6%, compared to double-digit margins. Growth isn't what it used to be, but retention remains high. The Trade Desk closed out Q1 with a retention rate above 95%, maintaining a streak that has lasted for more than a decade.
The correction is overdone at this point
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Marc Guberti has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Roku and The Trade Desk. The Motley Fool has a disclosure policy.
