Trade Desk is the IBD Stock of the Day as the digital advertising firm trades slightly below an entry point with first quarter earnings due in mid-May. Trade Desk stock has gained 21% in 2024 and 43% over the past 12 months while consensus estimates expect flat revenue growth this year.
On the stock market today, Trade Desk stock edged up 0.2% to close at 86.84. The stock is forming a cup-with-handle base with an 89.88 buy point.
The company's automated platform enables brands and ad agencies to buy online and mobile ads in real time, rather than in advance manually. In addition, Ventura, Calif.-based Trade Desk helps clients leverage online data to improve their targeted advertising.
Investors may want to be cautious ahead of the Trade Desk earnings report due mid-May. One strategy around earnings would be to use call options.
Volatile Trade Desk Earnings Reports
Trade Desk has been volatile when reporting financial results, diving in November 2023 and popping in February.
The company's fourth-quarter earnings rose 8% to 41 cents a share from a year earlier, in-line with consensus estimates.
Revenue rose 23% to $1.95 billion last year. Analysts polled by FactSet project 23% sales growth again in 2024, then dipping to 19.6% in 2025.
After popping on fourth-quarter earnings, Trade Desk stock forged a cup-with-handle base, with an 89.88 buy point. Trade Desk stock is about 3% below the entry point as of today.
Shares retreated in early March as investors weighed the outlook for digital advertising growth in 2024. Internet TV has been a growth driver for Trade Desk stock as more video streaming services become advertising supported.
Trade Desk's ad platform supports video streaming Roku, Walt Disney and others.
Disney Upside, Amazon Risk?
Shares in Trade Desk popped March 21 after Disney announced a new Real-Time Ad Exchange (DRAX) programmatic ad sales platform. Google parent Alphabet and Trade Desk were named as initial partners for the digital ad platform, which combines streaming ad inventory across Hulu and Disney+.
"We see this deeper Disney partnership as a modest incremental positive," said Morgan Stanley analyst Matthew Cost in a recent report. "We believe this announcement is one additional data point showing the value that the market ascribes to TTD's product and is ultimately bullish for its ability to gain market share in internet TV going forward."
On the other hand, Amazon.com has been an overhang on Trade Desk stock. Amazon Prime has expanded its ad-supported video streaming, offering big brands an alternative to Trade Desk customers.
"We believe fears over the Amazon Prime Video's ad-supported launch are overblown," Jefferies James Heaney said in a recent report. "We would expect Amazon will pull more budget away from linear (broadcast) TV than it will from existing internet TV budgets being transacted through TTD. In our view, TTD's key advertisers are unlikely to shift significant budget into Amazon Prime Video, particularly not in the near-term."
Trade Desk Stock Technical Ratings
Meanwhile, Trade Desk stock holds an IBD Composite Rating of 96, according to IBD Stock Checkup.
IBD's Composite Rating combines five separate proprietary ratings into one easy-to-use rating. The best growth stocks have a Composite Rating of 90 or better.
Further, Trade Desk stock has an Accumulation/Distribution Rating of B-minus. That rating analyzes price and volume changes in a stock over the past 13 weeks of trading. Its current rating indicates more funds are buying than selling.
The rating, on a scale of A+ to E, measures institutional buying and selling in a stock. A+ signifies heavy institutional buying; E means heavy selling. Think of the C grade as neutral.
Follow Reinhardt Krause on Twitter @reinhardtk_tech for updates on artificial intelligence, cybersecurity and cloud computing.
