Trade Desk Shares Tank Despite Earnings Beat: Analysts 'Surprised By Weak Guide'

Shares of Trade Desk Inc TTD tanked in early trading on Friday, after the company reported its third-quarter earnings.

The results came amid an exciting earnings season. Here are some key analyst takeaways:

• Truist Securities analyst Youssef Squali maintained a Buy rating, while reducing the price target from $90 to $80.
• Piper Sandler analyst Matt Farrell reiterated an Overweight rating, while cutting the price target from $100 to $80.
• Needham analyst Laura Martin reaffirmed a Buy rating and price target of $100.
• Stifel analyst Mark Kelley maintained a Buy rating on the stock.

Check out other analyst stock ratings.

Truist Securities: The pullback in the stock following the earnings release presents “an opportunity to own one of the best digital ad platforms at a reasonable valuation given its growth/margin profile,” Squali said.

“3Q exceeded expectations and mgmt's execution remains exceptional, with significant market share gains,” the analyst wrote. “Strength in FY24 should be driven by further adoption of CTV in the US & int'l, by Retail Media budgets moving online, augmented by political spend."

Piper Sandler: While Trade Desk reported “solid” third-quarter results, it guided to fourth-quarter revenue and EBITDA “well below expectations,” Farrell said.

“Management noted it saw some cautiousness from advertisers starting in the second week of October, but it has since stabilized,” the analyst wrote. “After hearing commentary across the digital ad space to-date, we are a bit surprised by the weak guide, but the company’s exposure to brand and top of funnel could be the driver."

Needham: "TTD reported strong 3Q23 results, beating consensus and our estimates, at 25% y/y rev growth,” Martin wrote in a note. “However, 4Q guidance was well below consensus,” he added.

“Since TTD typically over delivers its guidance, and 4Q fundamentals to not threaten TTD's winner-take-most strategic position, deep moats, or its pricing power, we are buyers on weakness,” the analyst stated.

Stifel: “We view the better 3Q results as in-line with our expectations given positive checks in the quarter, but the 4Q outlook implies topline growth decels ~680bps sequentially against an easier comp (3Q22 growth was +31%, 4Q22 growth was +24% y/y),” Kelley said.

“Given we're close to the EOY with the 2024 planning process likely starting (we heard during our checks that there may be slightly more visibility this year vs. the same time last year), we'll look for clarity on the more cautious outlook and will update our thoughts after the call,” he added.

TTD Price Action: Shares of Trade Desk had declined by 19.33% to $61.96 at the time of publication Friday.

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