Morningstar

Trade Desk Earnings: Another Weak Forecast and Poor Execution

We’ve reduced our fair value estimate of Trade Desk stock.

The Trade Desk logo is displayed on a smartphone screen.
Cheng Xin via Getty
Securities in This Article
The Trade Desk Inc Class A
(TTD)

Key Morningstar Metrics for Trade Desk

  • Fair Value Estimate
    : $16.00
  • Morningstar Rating
    : ★★★
  • Morningstar Economic Moat Rating
    : None
  • Morningstar Uncertainty Rating
    : Very High

What We Thought of Trade Desk’s Earnings

Trade Desk TTD shares are selling off by over 20% after reporting continued deceleration in growth during the second quarter. Third-quarter guidance is extremely weak, indicating a 12% year-over-year revenue decline and lower operating margins.

Why it matters: Our measurements show that growth in the overall advertising market is reaccelerating, yet it continues to move away from Trade Desk. Trade Desk’s slowdown and an artificial intelligence-driven advertising supply chain that favors proprietary data (where the firm remains underresourced) give us limited confidence in a near-term turnaround.

  • Quarter after quarter, management states that its value proposition of independence (no inventory ownership) will deliver results as advertisers question the performance of closed ecosystems like Meta, Google, and Amazon. We aren’t seeing that in the data. We estimate the three ad giants have gained 250 basis points of market share over the past two years to 82%.
  • We believe Trade Desk is at a structural disadvantage because it operates only on the demand side of the advertising supply chain. In contrast, the ad giants and AppLovin operate as closed-loop platforms, with ownership over proprietary conversion data. Performance differences are likely to widen.

The bottom line: We reduce our fair value estimate to $16 per share from $21, reflecting a decrease in our forecast of average annual growth over the next five years to 4% from 9%. This better reflects our view that pure-play demand-side platforms face a data ceiling on model improvements.

  • Beyond lower growth expectations, tension with its largest customers, and significant senior management turnover, we struggle to endorse a company with large, persistent transfers of wealth from shareholders to employees via massive stock-based compensation. SBC has averaged roughly $500 million per year since 2022, yet the company’s largest annual GAAP net income was around $440 million in 2025.

Editor’s Note: This analysis was originally published as a stock note by Morningstar Equity Research.

The author or authors do not own shares in any securities mentioned in this article. Find out about Morningstar’s editorial policies.

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