TTD Stock Before Q4 Earnings: A Smart Buy or Risky Investment?

The Trade Desk TTD is set to release its fourth-quarter 2024 results on Feb. 12.Find the latest EPS estimates and surprises on Zacks Earnings Calendar.For the fourth quarter of 2024, the company expects revenues of $756 million. The Zacks Consensus Estimate for fourth-quarter revenues is pegged at $758.05 million indicating a year-over-year increase of 25.13%.The consensus mark for earnings is pegged at 58 cents per share, unchanged in the past 30 days. The figure calls for a year-over-year increase of 41.46%.The Trade Desk Price and EPS Surprise The Trade Desk price-eps-surprise | The Trade Desk QuoteThe company’s earnings beat the Zacks Consensus Estimate in three of the trailing four quarters while missing the same on one occasion, with an average earnings surprise of 6.09%.Let’s see how things have shaped up for this announcement.Key Factors to Note for TTD’s EarningsThe Trade Desk’s top-line growth in the fourth quarter is expected to have benefited from a significant increase in digital spending in key areas such as Connected TV (CTV) and retail media.TTD is expanding its footprint among marketers who are increasingly spending more on premium videos like CTV. This is expected to have contributed to the company’s performance in the quarter to be reported.Retail media is expected to continue being one of TTD’s fastest-growing business areas in the fourth quarter. Retail data on TTD’s platform is transforming how consumer packaged goods advertisers approach measurement and attribution, helping TTD attract more business and grow in this segment.TTD’s advancements in measurement, such as the TV Quality Index and its growing network of retail data partners, are helping advertisers prove the effectiveness of its campaigns in new, objective ways. This is expected to attract more clients and foster long-term growth.The company’s new AI-powered platform, Kokai, is expected to help advertisers identify and target new customers with greater precision in the to-be-reported quarter. The increasing number of data elements per impression from Kokai is expected to improve campaign performance and unlock additional advertising budgets significantly.TTD Trading at a PremiumTTD shares have appreciated 29.2% over the trailing six-month period, outperforming the Zacks Computer & Technology sector’s return of 13.6% and the Zacks Internet Services industry’s 15.4% rally.TTD Beats Industry, SectorImage Source: Zacks Investment ResearchHowever, 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 18.97X compared with the industry’s 5.56X.Price/Sales Ratio (F12M)Image Source: Zacks Investment ResearchRobust Partnerships and Client Base Bode Well for TTDThe Trade Desk’s extensive partnerships and growing client base are likely to have driven growth during the fourth quarter. Its network includes industry leaders like Disney DIS, NBCU, Walmart, Roku ROKU, LG, Fox, and Netflix.Strong momentum across TTD’s two initiatives, namely UID2 and OpenPass, which focus on identity and authentication in the post-cookie era, is expected to have benefited from increased demand for its advertising services in the fourth quarter.Spotify Technology SPOT, via its extended partnership with TTD, is piloting integrations with OpenPath and UID2 through the Spotify Ad Exchange. This collaboration aims to improve addressability and provide deeper insights into Spotify’s premium ad inventory, which is likely to have boosted TTD’s service adoption and revenue growth.Integrations with Disney’s real-time ad exchange, which includes Hulu and Disney+ through TTD’s OpenPath technology, have been a game changer and will likely continue to provide significant growth opportunities in the next quarter as TTD gains more ad inventory.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.The Trade Desk: Smart Buy or Risky Bet?The Trade Desk’s strong portfolio and expanding partner base serve as key strengths. Its Growth Score of A indicates that investors who already own the stock might expect the company’s growth prospects to be rewarding over the longer term.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.Growing regulatory scrutiny around data privacy and evolving consumer data practices also threaten to disrupt the established audience-targeting methods.TTD’s reliance on partnerships with third-party platforms also exposes it to vulnerabilities from changes in these partners’ policies or technologies. 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. 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(ROKU): Free Stock Analysis Report Spotify Technology (SPOT): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks