Key Takeaways
- The Trade Desk began selling Skydance Pause Ads on HBO Max and discovery+ in Italy, exclusively through its platform at launch.
- Q2 revenue rose just 3% to $715 million, and Q3 guidance of at least $650 million implies a decline.
- Shares have lost 75.9% in a year and trade at 7.9x forward EV/EBITDA.
- The November 6 Q3 report will show whether CTV growth and cost cuts can stabilize revenue.
The Trade Desk (TTD) keeps adding ad inventory, even as its own growth stalls.
On October 13, it began selling Skydance Pause Ads on HBO Max and discovery+ in Italy. These ads appear only when a viewer hits pause, so they never interrupt the show.
Shares rose 3.2% to $13 on October 20. That is barely above the 52-week low of $12, and the stock has lost 75.9% over the past year.
A new format, sold one way
The ads run on connected TV, or CTV, meaning streaming through internet-connected televisions. At launch, Skydance (SKYD) sells them in Italy only through The Trade Desk, using Programmatic Guaranteed deals, which are fixed, pre-agreed buys run through software.
Luca Nicoli of Skydance said in the release that the format offers “an impactful and seamlessly integrated ad experience.” Buyers can also manage pause ads inside Kokai, the company’s buying platform.
No revenue figures came with the news. That matters, because the core business is shrinking…
Q2 revenue rose just 3% to $715 million, missing the roughly $752 million consensus. Management guided Q3 to at least $650 million, which would mean a year-over-year decline.
CTV is the lone bright spot
CTV is still growing fast. Video makes up just over half the business, and CTV revenue grew more than 50% in both EMEA and APAC.
The rest is weak. CPG and auto advertisers, about 25% of the business, are pulling back, while Amazon (AMZN) competes for the same streaming budgets.
Analysts now model a long reset…
Consensus expects revenue to shrink about 5.2% a year over the next two years. Over the last three years, revenue grew 22.4% annually.
TIKR tracks 36 analysts on The Trade Desk. How many say “Buy”?
See the full breakdown of Buy, Hold, and Sell ratings on The Trade Desk, along with Wall Street’s revenue and earnings estimates, all in one place. More than 500,000 investors use TIKR to research stocks like this one. See The Trade Desk’s Analyst Ratings
Cheap, with a cash cushion
The company is cutting about 15% of its workforce, with $39 million to $51 million in cash charges. Yet it still holds about $1.5 billion in cash and short-term investments and carries no debt.
That cushion helps explain a valuation that has collapsed…
Shares trade at 7.9x forward EV/EBITDA, which compares enterprise value to expected operating cash earnings, and 13.7x forward earnings. The average analyst target of $14 implies about 7% upside.
My take: Pause Ads keep the product sharp, but they don’t fix demand. The stock looks cheap, yet shrinking revenue usually keeps cheap stocks cheap until growth turns.
Next comes the November 6 Q3 report. Investors want revenue above $650 million and CTV holding its 50%-plus pace.
So what is The Trade Desk stock actually worth?
TIKR lets you forecast the future price of any stock in less than a minute. Just enter a few assumptions into TIKR’s valuation model and see what The Trade Desk could be worth. Start from Wall Street consensus estimates, or adjust the inputs to reflect your own view of the business. It’s free to use.
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!
