Trade Desk TTD shares on Friday slumped after the digital ad platform cautioned investors that sales would slow into the final months of the year as companies pull back on marketing outlays.
Trade Desk, which has a commanding share of the programmable market for connected-TV advertising, topped Wall Street forecasts with third-quarter earnings of around $200 million, or 33 cents a share, on revenue of $493.3 million.
The group said, however, that revenue would slow to around $580 million over the final months of the year, compared with analysts' estimates of around $611.5 million. This is the period when companies normally ramp up marketing efforts as they seek to drive holiday-season sales.
'Transitory caution among advertisers': Trade Desk CEO
"We represent the vast majority of the Ad Age top 200 advertisers, the largest advertisers in the world," Chief Executive Jeff Green told investors on a conference call late Thursday. "Starting in the second week of October, we have seen some transitory cautiousness across some of those advertisers."
"These include, for example, industries that have been impacted by recent strikes such as the U.S. auto industry," he added. "Through the first week of November, we have seen spend stabilize and we are optimistic for the remainder of the year and for 2024."
Trade Desk shares at last check were off more than 17% at $63.35. In 2023 through the close of trading Thursday, the stock was up 71%.
"We underappreciated the degree to which Trade Desk would be caught in the brand ad spend pause that social advertisers experienced," said KeyBanc Capital Markets analyst Justin Patterson. He carries an overweight rating with a reduced $84 price target on the stock.
"However, if we assume the bulk of the revenue revision is from transitory factors, [Trade Desk] now has a clear path toward reaccelerating growth against depressed estimates and a valuation near the low end of the three-year range," he added.
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