Down 85% from it’s peak, so what’s going on?
This is an interesting case of hypergrowth story turned into possible AI victim…
But I think the story is more nuanced than that…
Let’s look at the facts here, you’ve got a stock trading at less than 10x forward earnings… that’s still growing both revenue and earnings in double digits… and free cash flow at more than 20% annually… while buying back stock.
This a company that is the most profitable it’s ever been… so why the doom and gloom.
The first is the belief that all companies will just use Meta, Google and Amazon for their advertising and third party advertisers like TTD have no use going forward.
Amazon is probably the biggest threat of the 3, as they are aggressively pushing Amazon DSP and have the advantage of Prime data (for what it’s worth, I also think Amazon is massively undervalued right now as well). Plus their partnership with Netflix also potentially hurts TTD.
But I believe that even if the advertising market condenses and a higher portion of spend goes to the big 3… there is still room for an independent like TTD
The other question mark is a major publisher left the platform over some improper billing allegations, TTD has since been cleared of this by an independent auditor and still maintains 95% customer retention. So for me, this concern is overblown.
Plus the company still has over $1B in net cash (13% of it’s market cap), and high insider ownership with a Founder-CEO at the helm.
That founder is Jeff Green, who has steered TTD from startup to over $2.9B in annual revenue. And he just bought $150m of stock at the beginning of the year.
If that doesn’t signal his commitment to the cause, I don’t know what does.
The purchase was on top of an additional $500m being earmarked for stock buybacks.
And even with the challenges that lay ahead… right now, I believe the valuation is fully in favour of the buyer
Oliver
Disclaimer: I (Oliver El-Gorr) have not bought or sold any shares within the previous 72 hours. I will also not buy or sell any shares for the next 72 hours as per our internal trading policy