CHONGQING, CHINA – AUGUST 7: In this photo illustration, a smartphone displays the logo of The Trade Desk, Inc. (NASDAQ: TTD), a global technology company specializing in programmatic advertising, in front of a screen showing the company’s latest stock market chart on August 7, 2025 in Chongqing, China. (Photo illustration by Cheng Xin/Getty Images)
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The Trade Desk stock fell by 29% in after-hours trading, despite reporting strong quarterly results. This was mainly attributed to a slight miss on the Q3 guidance and the unforeseen departure of Laura Schenkein as CFO of the company, which has unsettled investors. This drop follows a significant rally, with TTD shares climbing nearly 20% over the past thirty days after the company’s addition to the S&P 500 index.
In light of its recent sell-off, a pivotal question is whether TTD stock is worth buying at prices below $65. We believe TTD presents an attractive investment at current pricing. This conclusion stems from our detailed analysis of the company’s current valuation in relation to its multi-year operating performance and financial status. Our assessment across four key metrics—Growth, Profitability, Financial Stability, and Downturn Resilience—indicates that The Trade Desk shows strong operating performance and financial robustness, as outlined in our analysis below.
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How Does The Trade Desk’s Valuation Compare to The S&P 500?
Based on what you pay for each dollar of sales or profit, TTD stock appears very costly compared to the broader market.
- The Trade Desk has a price-to-sales (P/S) ratio of 13.1 compared to 3.0 for the S&P 500
- Furthermore, the company’s price-to-free cash flow (P/FCF) ratio stands at 42 versus 20.6 for the S&P 500
- Additionally, it has a price-to-earnings (P/E) ratio of 75.6 compared to the benchmark’s 22.6
What Have The Trade Desk’s Revenue Trends Been In Recent Years?
The Trade Desk’s Revenues have significantly increased over the past few years.
- The Trade Desk’s revenue has grown at an average rate of 25.8% over the last 3 years (in comparison to an increase of 5.2% for the S&P 500)
- Moreover, its quarterly revenues rose by 19% to $694 million in the latest quarter from $585 million a year prior (versus a 4.3% increase for the S&P 500)
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How Profitable Is The Trade Desk?
The Trade Desk’s profit margins are greater than those of most companies within the Trefis coverage universe.
Is The Trade Desk Financially Stable?
The Trade Desk’s balance sheet appears extremely robust.
- The Trade Desk reported a debt figure of $344 million at the close of the most recent quarter, with a market capitalization of $32 billion. This suggests a very strong Debt-to-Equity Ratio of 1.1% (versus 23.9% for S&P 500). [Note: A lower Debt-to-Equity Ratio is preferred]
- Cash (including cash equivalents) constitutes $1.7 billion of the $6.0 billion in total assets for The Trade Desk. This results in a very strong Cash-to-Assets Ratio of 28.3% (compared to 6.7% for S&P 500)
How Resilient Is TTD Stock During Economic Downturns?
TTD stock has underperformed compared to the S&P 500 index during several recent downturns. While investors are hopeful for a mild landing for the U.S. economy, how dire could the situation become if another recession occurs? Our dashboard How Low Can Stocks Go During A Market Crash tracks the performance of key stocks during and after the last six market crashes.
Inflation Shock (2022)
- TTD stock plummeted 64.3% from a peak of $111.64 on November 16, 2021, to $39.89 on November 9, 2022, while the S&P 500 saw a peak-to-trough downturn of 25.4%
- The stock fully regained its pre-Crisis peak by October 4, 2024
- Since that time, the stock has surged to a peak of $139.51 on December 4, 2024, and is currently trading at approximately $63
COVID-19 Pandemic (2020)
- TTD stock dropped 54.2% from a peak of $31.54 on February 19, 2020, to $14.44 on March 18, 2020, compared to a peak-to-trough drop of 33.9% for the S&P 500
- The stock fully recovered to its pre-Crisis peak by May 7, 2020
Bringing It All Together: Implications for TTD Stock
In conclusion, The Trade Desk’s performance across the parameters mentioned above is summarized as follows:
- Growth: Very Strong
- Profitability: Strong
- Financial Stability: Very Strong
- Downturn Resilience: Weak
- Overall: Strong
The Trade Desk has demonstrated strong performance across essential financial metrics. Although its current valuation multiple exceeds that of the broader market, this is characteristic of high-growth advertising firms. For instance, its average price-to-sales ratio over the last four years has been 24x. While competitors like AppLovin have a greater valuation, trading at 29x revenue, The Trade Desk’s recent stock decline presents an attractive entry opportunity.
Key Risks to Consider
While we assert that the fundamentals are strong, it is important to recognize the inherent risks. The Trade Desk encounters fierce competition from companies like AppLovin, and regulatory scrutiny concerning data privacy and market concentration may impact its business model. Additionally, the company is sensitive to economic downturns, which frequently result in decreased advertising expenditures, potentially hindering growth and making its premium valuation challenging to justify.
Slowing growth is another concern, with Q2 growth at 19% compared to 25% in Q1. This, along with the departure of its CFO, may be contributing to the current market devaluation of the stock. Thus, investors should brace for the possibility of the stock declining an additional 20-30% from here. Also, check out – Buy or Sell TTD Stock?
Despite these hurdles, we believe the company’s solid fundamentals and operational performance will ultimately prevail. Considering the existing disparity between its valuation multiple and its historical average, we expect significant gains for investors with a three- to five-year investment outlook.
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