Trade Desk Rallies To All-Time High After Q1 Print

Trade Desk Inc TTD reported after the close Thursday with non-GAAP EPS of 34 cents and 61-percent revenue growth to $85.7 million.

The results beat consensus expectations that called for earnings of 10 cents per share on revenue of $73.23 million.

Trade Desk issued upbeat Q2 revenue guidance and raised its full-year revenue and EBITDA guidance by 7 percent and 14 percent, respectively.

The shares were jumping 40.2 percent Friday to an all-time high of $73.94 on above-average volume. 

Short Sellers Scrambling? 

Fundamentals do have a role in the sharp spike, but the handiwork of short sellers is also suspected, given the magnitude of upside. Short percentage as a float for the stock was at 30.9 percent, according to shortsqueeze.com.

A short squeeze occurs when traders who sell a stock in anticipation of a drop in the future begin to pile into the stock in order to minimize their losses when it moves in the reverse direction, which lifts the stock price further.

The short interest was at 8.25 million by the end of April, up from 7.78 million at the end of February, according to Nasdaq data.

The short interest ratio, or the number of days it would take to cover the short position at the current average daily volume, was 17 days at the end of April compared to eight days by the end of March.

Stifel: Trade Desk Has 'Continued Momentum' 

Stifel analyst John Egbert reiterated a Buy rating on the shares of Trade Desk after the quarterly report and lifted the price target from $69 to $75.

Trade Desk is seeing "continued momentum across mobile and emerging channels such as connected TV and programmatic audio," Egbert said in a Friday note.

The Q1 upside was driven by new brand and agency client additions and expansions in the budgets of existing clients, the analyst said. The 202-percent year-over-year growth in EBITDA comes primarily due to strong revenue growth, Egbert said. This underlines the high incremental margins of the company's business model, he said. 

Stifel raised its 2018 revenue and adjusted EBITDA estimates to reflect ongoing momentum in Trade Desk's business.

"We continue to recommend shares of TTD as the company is a leading beneficiary of the secular shift to programmatic advertising," the analyst said. 

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