The Trade Desk TTD shares have lost 52.9% in the year-to-date period, underperforming the Zacks Computer & Technology sector’s decline of 10% and the Zacks Internet Services industry’s decrease of 13.8%.

The company has underperformed its digital advertising peers, including Alphabet GOOGL and Amazon AMZN. GOOGL and AMZN shares have plunged 15.1% and 12.1%, respectively, in the year-to-date period.

The underperformance can be attributed to the slower adoption of its next-generation platform, Kokai, and a significant reorganization that led to increased complexity. 

However, TTD is benefiting from a significant increase in digital spending in key areas such as Connected TV (CTV) and retail media. In the fourth quarter of 2024, The Trade Desk reported a record-breaking spend of more than $12 billion on its platform, signaling continued growth in advertiser demand.

TTD Underperforms Sector, Industry

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Can The Trade Desk recover from its underperformance and capitalize on the growth in digital advertising, particularly in CTV and retail media?

TTD Expands CTV Growth With UID2 and Ventura OS

TTD’s focus on Connected TV continued to be a major growth driver, with CTV remaining its largest and fastest-growing channel.  With the continued expansion of programmatic advertising on CTV, the company leveraged Unified ID 2.0 (UID2) for improved precision and addressability, further enhancing its performance in this space.

In the fourth quarter of 2024, The Trade Desk further advanced support for UID2, a privacy-centric identity solution designed to replace third-party cookies and improve the relevance of digital advertising while prioritizing user control and privacy. 

iHeartMedia adopted UID2 to provide its advertising partners with enhanced tools for effective targeting, precise measurement, and accurate attribution, fostering more efficient campaigns. 

Additionally, leading supply-side platforms, including FreeWheel, Index Exchange, Magnite, and PubMatic, integrated the European Unified ID, enabling improved addressability and broader reach across the open Internet in line with evolving privacy regulations.

TTD also introduced its Ventura Operating System for CTV, designed to drive greater efficiency and transparency in CTV advertising. This operating system enables better data management, allowing TTD to enhance its targeting capabilities, which are crucial as the CTV market expands.

TTD Bolsters Digital Ad Ecosystem With Sincera Acquisition

The acquisition has also played an important role in further strengthening TTD’s position in the digital advertising ecosystem.

In January 2025, TTD entered into a definitive agreement to acquire Sincera, a leading digital advertising data company, to enhance its programmatic advertising platform by integrating Sincera’s actionable insights on data quality. This integration enables more accurate ad valuation and improves both publisher data signals and campaign optimization for advertisers.

Robust Partnerships and Client Base Bode Well for TTD

The Trade Desk’s extensive partnerships and growing client base have been noteworthy. Its network includes industry leaders like Disney, NBCU, Walmart, Roku ROKU, LG, Fox, and Netflix.

Roku has adopted UID2 to enhance advertiser targeting precision and enable secure data collaboration through Roku Media, which will likely lead to improved advertising performance and increased demand for TTD’s advertising solutions.

Earnings Estimate Revisions Show Upward Trend for TTD

TTD expects revenues of at least $575 million in the first quarter of 2025. The Zacks Consensus Estimate for first-quarter 2025 revenues is pegged at $576.13 million, indicating a year-over-year increase of 17.28%.

The Zacks Consensus Estimate for first-quarter 2025 earnings is pegged at 26 cents per share, which has remained unchanged in the past 30 days. 

Find the latest EPS estimates and surprises on Zacks Earnings Calendar.

TTD Trading at a Premium

The Value Score of F suggests a stretched valuation for The Trade Desk at the moment, which makes it a risky bet for risk-averse investors.

The TTD stock is trading at a premium with a forward 12-month Price/Sales of 8.79X compared with the industry’s 4.61X.

Price/Sales F12M

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The Trade Desk: Hold The Stock for Now

The Trade Desk’s strong portfolio and expanding partner base serve as key strengths. However, TTD is suffering from macroeconomic uncertainty. 

The intensely competitive nature of the digital advertising industry, dominated by industry giants such as Google and Amazon, continues to put pressure on TTD’s market positioning. Stretched valuation also remains a concern.

The Trade Desk carries a Zacks Rank #3 (Hold), which implies investors should wait for a more favorable entry point to accumulate the stock. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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