The Trade Desk Misses Revenue for First Time in 8 Years Amid Amazon Threat
The Trade Desk, a leading demand-side platform (DSP) in the advertising industry, has experienced its first revenue miss in over eight years. This occurred in late 2024, signaling that even the most successful companies can face challenges. Meanwhile, Amazon has emerged as a significant threat, with annual advertising revenue surpassing $50 billion and a partnership with Netflix for premium CTV inventory.
The Trade Desk has historically delivered consistent growth, with over 30 consecutive quarters of revenue beats until late 2024. Despite this, investors may face modest returns if current steep multiples, such as a P/E ratio of approximately 60 and a P/S ratio of about 9, compress. The company's strong performance is attributed to its AI-driven innovations like Kokai, which enhance campaign effectiveness through deep learning.
Alphabet and Meta continue to dominate the digital ad market, refining their targeting capabilities and improving ROI for advertisers. The Trade Desk has maintained a competitive edge as the independent alternative to tech giants, with customer retention rates above 95%. However, companies like Amazon have increasingly built competition against The Trade Desk in the advertising business field in recent years.
The Trade Desk's recent revenue miss serves as a reminder that no company is immune to challenges. Despite this, the company's history of consistent growth, AI-driven innovations, and strong customer retention make it a compelling investment. However, investors should be aware of the steep multiples and potential competition from companies like Amazon.
