The Trade Desk, Inc.

TTD Details

The Trade Desk, Inc. (NASDAQ: TTD) is a technology firm that offers an ad-buying platform. Ad buyers may design, manage, and optimize data-driven digital advertising campaigns across various ad formats and channels, including display, video, audio, in-app, and social, on a variety of devices using its cloud-based platform. TTD makes money by collecting a platform charge based on a percentage of a client's total ad expenditure and offering data and other value-added services. As of August 17, 2021, the company’s market capitalization stood at USD 37.80 billion.

Launched New Media Trading Platform: TTD announced the introduction of Solimar, a new trading platform that would enable advertisers to improve their digital advertising campaigns across the open internet, on July 7, 2021. Solimar helps marketers to unlock the potential of their valuable first-party data, allowing them to increase the precision of their digital marketing efforts while also promoting customer privacy. With the launch of Solimar, the company feels that they have arrived at a critical juncture in the evolution of digital advertising.

Launched TD7 to invest in Open Internet Start-Ups: TTD announced the creation of TD7, an internal venture capital arm, on July 7, 2021, to invest in open internet technology entrepreneurs. TTD also announced an early investment in Chalice, a pioneer in innovative methods to algorithmic ad buying technology.

Strong 6MFY21 Results: The company reported a sharp YoY uptick of 66.58% in revenues to USD 499.78 million during 6MFY21 (ended June 30, 2021) compared to USD 300.01 million during 6MFY20, primarily driven by an increase in the number of advertising campaigns executed per client. In addition, TTD reported a sharp increase in net income to USD 70.34 million during 6MFY21 compared to USD 49.17 million during 6MFY20. As of June 30, 2021, its cash and cash equivalents (including short-term investments) were USD 705.06 million, with no outstanding debt.

Key Risks: Each share of TTD's Class B common stock has ten votes, whereas each share of its Class A common stock has one vote per share. As a result, as of June 30, 2021, Class B common stockholders, including the company’s executive officers, employees, and directors, and their affiliates, together held approximately 51% of the voting power. This concentration of voting power constrains the ability of other shareholders to influence corporate matters.

Outlook: TTD, in its Q2FY21 press release, stated that it expects its Q3FY21 revenue to be at least USD 282 million along with the adjusted EBITDA of around USD 100 million.

Valuation Methodology: Price/Sales per share Multiple Based Relative Valuation

(Analysis by Kalkine Group)

* % Premium/(Discount) is based on our assessment of the company's NTM trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks.

TTD Daily Technical Chart (Source: REFINITIV)

Stock Recommendation: TTD stock price rose 66.91% in the past twelve months and is currently leaning towards the higher-band of the 52-week range of USD 40.85 to USD 97.28. The stock is currently trading above its 50 and 200 DMA levels, and its RSI Index is at 49.16. We have valued the stock using the Price/Sales-based relative valuation methodology and arrived at a target price of USD 85.24. Considering the company's growth prospects, new product launches, solid margins, associated risks, and current valuation, we recommend a "Hold" rating on the stock at the closing price of USD 79.26, up 0.38% as of August 17, 2021.

* The reference data in this report has been partly sourced from REFINITIV.

* All forecasted figures and industry information have been taken from REFINITIV.