| Author | Message | ||
     Entrepreneur Kurra Bewarse Username: Entrepreneur Post Number: 3223 Registered: 05-2011 Rating: N/A |
The Trade Desk is finding plenty of bids after delivering another blowout quarterly report (905.03 +58.53) It seems fitting that both The Trade Desk (TTD) and Roku (ROKU) reported 4Q20 earnings after the close yesterday since the companies are capitalizing on the same powerful secular trend. Namely, marketers are increasingly pouring more advertising dollars into connected TV (CTV) channels as streaming services explode in popularity. As anticipated, this migration towards CTV facilitated blowout results once again for both companies. During the quarter, CTV revenue surged by over 100% for TTD. As an agnostic provider of programmatic ad buying, TTD is ideally positioned to benefit from rising subscriber counts across multiple streaming services, including ROKU, Disney+ (DIS), and Amazon Prime (AMZN). Furthermore, TTD is appealing to marketers who are looking to steer away from platforms that rely on sometimes controversial user-generated content, like Twitter (TWTR) or Facebook (FB). This approach was vividly illustrated in Pinterest's (PINS) remarkable Q4 report from February 4. PINS' platform is generally seen as "safer" for advertisers since most people use it for specific reasons, such as finding a recipe or looking for project ideas. It's also important to note that TTD doesn't just simply purchase ads. Rather, the company has also invested in and expanded its data analysis capabilities, allowing it to provide measurement tools that improve the effectiveness of targeted advertising. These capabilities, combined with its strong position across the open internet, is enabling TTD to capture market share from seemingly bulletproof tech giants like FB and Google (GOOG). The only real question heading into TTD's report was whether it would be strong enough to avoid a sell-the-news reaction. Since TTD last reported earnings on November 5, shares have rocketed higher by 40%. In turn, its valuation became even pricier with a forward P/S of ~38x. After an initial knee-jerk reaction lower during after hours trading yesterday, bulls wrestled control away and the stock has resumed its familiar upward track. There was some doubt whether TTD's 1Q21 guidance, which calls for revenue growth to slip to 35% from 48% in Q4, would be strong enough to spark a rally following the stock's meteoric rise. However, investors seem to be betting that TTD is taking a conservative approach to its outlook, while reining in mounting expectations. The main takeaway is that the story for TTD remains the same. As consumers continue to flock to streaming services, marketers are following their lead and are tapping TTD to help reach them. The main risk is that the stock is priced for perfection and that even a modest downgrade to TTD's growth prospects would likely hit the stock hard. At the moment, though, there are clear skies ahead since the CTV transition is only in the early innings. |