How Should You Play The Trade Desk Stock Going Into Q1 Earnings?

The Trade Desk, Inc. TTD will report its first-quarter 2025 results on May 8, after market close.The Zacks Consensus Estimate for the bottom line in the to-be-reported quarter is pegged at 25 cents compared with 26 cents reported in the prior year quarter. The estimate has been revised downward by 1 cent in the past 60 days. The consensus estimate for total revenues is pinned at $574.3 billion, implying a 16.9% year-over-year decline.TTD expects revenues to be at least $575 million, indicating 17% year-over-year growth. This includes a minor headwind from lapping the 2024 leap year and lower political ad spend compared to the first quarter of 2024.TTD beat the Zacks Consensus Estimate for earnings in each of the trailing four quarters, with an average earnings surprise of 7.68%. (Find the latest EPS estimates and surprises on Zacks Earnings Calendar.)Image Source: Zacks Investment ResearchWhat Our Model Predicts for TTD’s Q1Our proven model does not conclusively predict an earnings beat for TTD this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. But that is not the case here. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.TTD has an Earnings ESP of -9.45% and a Zacks Rank #5 (Strong Sell). You can see the complete list of today’s Zacks #1 Rank stocks here.The Trade Desk Price and EPS Surprise The Trade Desk price-eps-surprise | The Trade Desk QuoteFactors to Focus on Ahead of TTD’s Q1 EarningsDespite strong demand for its ad-buying platform, the company faced challenges from shifting market conditions and competitive pressures. The intensely competitive nature of the digital advertising industry, dominated by industry giants like Alphabet’s GOOGL Google and Amazon AMZN, continues to put pressure on TTD’s market positioning. Increasing macroeconomic uncertainty and escalating trade tensions remain concerns, as these could squeeze ad budgets.While Kokai is expected to replace Solimar entirely by the end of 2025, TTD currently maintains two platforms, leading to operational difficulties.Increasing digital spending in key areas, such as Connected TV (CTV) and retail media, is expected to have cushioned TTD’s topline performance in the to-be-reported quarter. In the fourth quarter of 2024, The Trade Desk reported a record-breaking spend of more than $12 billion on its platform, signaling continued growth in advertiser demand. The shift of advertising dollars to CTV continues to be the major growth driver.In the fourth quarter of 2024, The Trade Desk further advanced support for UID2, a privacy-centric identity solution designed to replace third-party cookies and improve the relevance of digital advertising while prioritizing user control and privacy. Major streaming platforms — Disney, Netflix, Paramount, Peacock, Fox and Max — are investing heavily in programmatic advertising, and many of them have adopted UID2, boosting addressability and precision targeting for advertisers. TTD expects increasing adoption to aid in the expansion of CTV advertising globally.TTD’s strategic efforts at international expansion, reorganization and structural improvements, with special stress on internal effectiveness and scalability, may have acted as tailwinds.TTD Stock PlungesTTD shares have plunged 58.1% in the past six months. It has significantly underperformed the 7.9% decline of its Internet Services industry and the 5.3% decline of the Zacks S&P 500 composite.Price PerformanceImage Source: Zacks Investment ResearchThe company has underperformed its digital advertising peers, including Alphabet and Amazon and Magnite MGNI. Alphabet and Amazon shares have plunged 9.1% and 11.2%, respectively, in the same time frame. Magnite has lost 9.8% in the past six months. Magnite is a supply-side platform that helps publishers manage and sell their ad inventory across various formats like streaming, online video, display and audio.Key Valuation Metric for TTDFrom a valuation perspective, TTD is quite expensive. The stock is trading at a premium with a forward 12-month Price/Sales of 9.08X compared with the industry’s 4.89X. Image Source: Zacks Investment ResearchInvestment Thesis for TTD StockThe Trade Desk’s strong portfolio and expanding partner base serve as key strengths. TTD is also driving its growth through strategic maneuvers, including full client migration to its Kokai platform, increased CTV and retail media penetration, and a larger push into AI-powered programmatic enhancements.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.What Should Investors Do With TTD Stock?TTD might disappoint with its first-quarter results, considering the company’s dismal share price performance and negative Earnings ESP. With a Zacks Rank #5, investors would be better off if they offloaded this stock from their portfolios. Zacks' Research Chief Names "Stock Most Likely to Double"Our team of experts has just released the 5 stocks with the greatest probability of gaining +100% or more in the coming months. Of those 5, Director of Research Sheraz Mian highlights the one stock set to climb highest.This top pick is among the most innovative financial firms. With a fast-growing customer base (already 50+ million) and a diverse set of cutting edge solutions, this stock is poised for big gains. Of course, all our elite picks aren’t winners but this one could far surpass earlier Zacks’ Stocks Set to Double like Nano-X Imaging which shot up +129.6% in little more than 9 months.Free: See Our Top Stock And 4 Runners UpWant the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Amazon.com, Inc. (AMZN): Free Stock Analysis Report Alphabet Inc. (GOOGL): Free Stock Analysis Report The Trade Desk (TTD): Free Stock Analysis Report Magnite, Inc. (MGNI): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks