Key Takeaways:
- Open Internet Shift: The Trade Desk is capturing market share as advertisers move away from walled gardens like Google and Facebook.
- Price Projection: Based on current momentum, the stock could reach $48 by December 2027.
- Potential Gains: This target implies a total return of 29% from the current price of $37.29.
- Annual Return: Investors could see roughly 14% growth per year over the next 24 months
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The Trade Desk (TTD) is winning the fight for the open internet. While Google retreats from third-party advertising and Amazon focuses on its own inventory, The Trade Desk is becoming the default platform for brands that want objective, data-driven ad buying across premium publishers.
Q3 revenue grew 18%, or 22% excluding political spending. More importantly, the company launched Kokai, a platform upgrade delivering 26% better cost per acquisition and 94% better click-through rates compared to the previous version.
Nearly 85% of clients now use Kokai as their default, and the performance improvements are driving joint business plans with major brands.
Despite this progress, TTD stock is down 68% from all-time highs. The market hasn’t fully appreciated how The Trade Desk’s objectivity positions it to capture advertising dollars fleeing walled gardens. With CTV growing faster than the overall business and international markets accelerating, the company is executing on multiple fronts.
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What the Model Says for TTD Stock
We built our valuation around The Trade Desk’s role as the objective DSP (demand-side platform) for the open internet. Unlike Google’s DV360 or Amazon’s DSP, which primarily serve their own inventory, The Trade Desk helps advertisers buy across all premium publishers without conflicts of interest.
Using assumptions of 16.6% annual revenue growth and 22.4% operating margins, our model projects the stock will reach $48 within two years. This assumes a 19x price-to-earnings multiple at exit.
That’s well below The Trade Desk’s historical average of 69.3x over the past decade. But it reflects the company’s maturation and the market’s skepticism about ad tech valuations. The 19x multiple is roughly in line with current trading levels, making it a conservative base case.
Our Valuation Assumptions
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Our Valuation Assumptions
TIKR’s Valuation Model lets you plug in your own assumptions for a company’s revenue growth, operating margins, and P/E multiple, and calculates the stock’s expected returns.
Here’s what we used for TTD stock:
1. Revenue Growth: 16.6%
The Trade Desk is growing through multiple channels, each addressing a specific market shift:
- CTV Dominance: Connected TV remains the fastest-growing channel, representing roughly 50% of business when combined with other video formats. The shift to programmatic CTV buying is accelerating as traditional upfront deals prove inefficient. Major publishers like Disney are integrating directly through OpenPath, The Trade Desk’s clean pipe to premium inventory.
- Walled Garden Exodus: Google’s antitrust trial revealed that DV360’s growth went almost entirely to YouTube, while open internet spending has been flat since 2019. The Trade Desk appears to have surpassed Google in open internet buying. One major analytics company recently chose The Trade Desk over a walled-garden offering, zero fees, and a focus on performance over price.
- Joint Business Plans Scaling: JBPs now represent about half the business and are growing significantly faster than non-JBP accounts. The company has over 180 active JBPs, with an additional 80 in the pipeline, totaling billions in spend. This direct brand engagement creates stickier, higher-value relationships.
2. Operating margins: 22.4%
The Trade Desk generated 43% adjusted EBITDA margins in Q3, demonstrating strong profitability even as it invested heavily in innovation.
The company launched multiple game-changing products this year: OpenPath for direct publisher connections, OpenAds for transparent auctions, Deal Desk for forward market buying, and Audience Unlimited for simplified data usage.
Our forecast of 22.4% EBIT margins assumes the company will invest aggressively in growth opportunities.
New CFO Alex Kayyal brings a growth mindset focused on capturing share of the $1 trillion advertising market. He’s evaluating every aspect of the business to identify high-ROI investments, from go-to-market strategies to product development.
Management is also restructuring sales incentives and expanding internationally, where growth significantly outpaces North America. These investments will pressure margins in the near term but should accelerate revenue growth over time.
3. Exit P/E Multiple: 19x
The Trade Desk currently trades at 34.3x trailing earnings. Our exit multiple of 19x reflects several factors:
Multiple Compression: As the company matures and growth moderates from 30% to mid-teens rates, the valuation premium typically declines. The market is also wary of ad tech stocks after years of underperformance by competitors.
Macro Uncertainty: Some large CPG and retail brands are still feeling pressure from tariffs and inflation. While categories like financial services, healthcare, and insurance are leaning into data-driven marketing, the overall advertising environment remains mixed.
Re-rating Potential: If The Trade Desk proves it can sustain high-teens growth while capturing share from walled gardens, the stock could command a higher multiple. The Google antitrust ruling could also accelerate market share gains if Google retreats further from the open internet.
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What Happens If Things Go Better or Worse?
The Trade Desk’s transformation of digital advertising is still unfolding. Outcomes depend on how quickly advertisers embrace objective buying and whether the company can maintain its innovation edge. Here’s how scenarios might play out through 2029:
- Low Case: If advertising budgets remain pressured and growth slows to 14.2% annually with margins compressing to 22.3%, the stock would deliver 11% total returns over four years, or about 3% annually. Even in a weak scenario, the diversified business model and strong balance sheet provide downside protection.
- Mid Case: Our base case assumes 15.8% revenue growth and 24% margins. This delivers 44% total returns, or roughly 10% annually. This outcome requires The Trade Desk to execute on Kokai adoption, scale JBPs, and grow international markets while maintaining pricing discipline.
- High Case: If the walled-garden exodus accelerates and CTV adoption surpasses expectations, revenue growth could reach 17.4%, with margins expanding to 25.4%. This scenario delivers 83% total returns, or about 16% annually, supported by a 12% EPS growth rate.
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The range of outcomes is relatively wide because The Trade Desk is navigating major industry shifts. The Google antitrust case, CTV fragmentation, and the rise of retail media all create opportunities but also introduce uncertainty about timing and competitive dynamics.
The Trade Desk has established itself as the objective platform for the open internet, just as advertisers are demanding transparency and performance.
With 85% of clients using Kokai, JBPs growing faster than the overall business, and international markets accelerating, the company is executing at a high level.
At 19x forward earnings with 17% revenue growth and multiple paths to market share gains, the stock offers attractive upside for investors who believe the open internet will win over walled gardens.
How Much Upside Does TTD Stock Have From Here?
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- Operating Margins
- Exit P/E Multiple
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any stocks mentioned. Thank you for reading, and happy investing!
