2.13.2025 -- The Trade Desk (TTD) saw a sharp decline, dropping 33% in a single day following its Q4 2024 earnings report. The stock is now down 40% from its 52-week high, a significant shift for one of the leading players in adtech.
With this move, investors may be wondering: What caused the drop, and how does it fit into The Trade Desk's broader history and market position?
Q4 Earnings Recap
For the first time in 33 quarters, The Trade Desk missed revenue estimates, which was a rare event for the company.
Key Q4 Numbers:
- Revenue: $741 million (below expectations)
- Year-over-Year Growth: 22% (slower than previous quarters)
- Q1 2025 Guidance: $575 million (projecting 17% YoY growth)
CEO Jeff Green acknowledged the company's successes but also recognized the slowdown:
"We fell short of our own expectations in the fourth quarter."
This combination of slower-than-expected growth and high valuation led to a sharp reaction in the stock price.
Market Reaction vs. Historical Trends
The Trade Desk has experienced significant pullbacks before, often during periods of market volatility or changing growth expectations.
Some past notable declines include:
- 2020 COVID-19 Selloff - Dropped 50% but rebounded within months.
- 2022 Growth Stock Correction - Declined 40%, followed by a steady recovery.
- 2025 Pullback - Now down 40% from its high - how it recovers remains to be seen.
While The Trade Desk has historically bounced back, recovery times has varied based on broader market conditions and company execution.
Valuation in Context
Even after the drop, The Trade Desk remains one of the highest valued companies in adtech:
- TTD P/E ratio: 135.6
- Adtech Industry Average P/E: 23.2
A higher valuation typically reflects strong growth expectations, but with revenue growth slowing, investors may re-evaluate how they view its long-term potential.
The Trade Desk's Market Position
Despite the earnings miss, The Trade Desk remains a key player in digital advertising, particularly in Connected TV (CTV) and programmatic ad buying.
Here are some factors shaping its position:
- Strong CTV Market Growth - Advertisers continue shifting from linear TV to digital platforms.
- Independent Alternative - Unlike Google and Meta, The Trade Desk provides advertisers with more transparency and flexibility.
- Unified ID 2.0 - A privacy-first alternative as third-party cookies phase out.
- Global Expansion - Increasing presence in Asia and Europe.
Looking Ahead
The Trade Desk remains a leader in its space, but growth is moderating, and valuation remains an important factor.
For those following the stock, some key areas to watch include:
- How does ad spend in 2025 impact revenue growth?
- Does CTV continue expanding at the expected pace?
- How does The Trade Desk navigate competition and regulatory changes?
As always, understanding both historical context and future market positioning is key in evaluating how any stock fits into an overall investment strategy.