The Trade Desk

[Barefoot]

The Trade Desk Inc is a global technology company based in Ventura, California. It offers brands and media buyers a self-service platform to manage data-driven advertising campaigns. Buyers can create highly personalized ad experiences across various channels, including display, native, video, audio, and social, and on a multitude of devices, including computers, mobile, and TV.
The company was co-founded in 2009 by Jeff Green, the company's chairman and CEO, and Dave Pickles, the chief technology officer.[4][5]
In 2017, revenue rose 52% to $308 million.[4] In September 2018, the firm had a market cap of $6.2 billion.-From Wikipedia

[Wildreamz]

It's better to change the title of the thread to "The Trade Desk".

Have been invested in it for quite some time (since 2017?). Looks like it is on track to become the third largest player in the ad-tech space. It is also highly profitable, growing both topline and bottom line at 50-60% for the longest time.

But it's current valuation (trailing PE ~100?) doesn't look like one that would interest fellow buddies, hence, never thought of starting a thread here.

[Barefoot]

Motley Fool pounded the table on this one. Know that the valuation is high but if the high growth runway is long, it maybe worth it. Happen to believe that bull mode in US stock market is still likely to continue till at least 2022, and the current correction should be about to end, so don't mind putting money into a few good US growth tech stocks like this one and Arista Networks.

[BRT]

missed this boat. looked at it around 50 but couldnt pull the trigger cos expensive using conventional metrics like pointed out. look where it is now. had a gd education on ad exchanges, dsp asp, doubleclick etc. really liked it.
- profit making
- cash flow positive
- industry growth
- co growing faster than industry
- good glassdoor reviews
- good personal reviews from two ppl i know working in the sg office

https://www.channelnewsasia.com/news/tec...k-11228614

While the number of journalists employed by Australian newspapers fell 20 per cent from 2014 to 2017 as print advertising revenues dwindled, Sims said, Google and Facebook between them captured nearly 70 per cent of all online advertising spend.

"This shift in advertising revenue online, and to digital platforms, has reduced the ability of media businesses to fund news and journalism," Sims said in remarks prepared for delivery to Sydney's International Institute of Communications.

[Wildreamz]

The story is enticing (@BRT sums it up well). TTD is one of (if not), the best pure play ad DSP (demand side platform), based on my rough industry research (glassdoor, quora, reviews etc.). Being the only publicly traded pure-play DSP with access to cheap capital, it is able to outspend their competitors and capture larger percentage of the market over time. This advantage may be critical as the industry is consolidating (https://www.business2community.com/digit...w-02102020). 

Rough Google Trend analysis shows that interest in The Trade Desk worldwide is outpacing other DSPs (https://trends.google.com/trends/explore...azon%20dsp).

But I don't think TTD is a slam dunk just yet. And due to the high valuation (at least, via traditional metrics), I expect the stock price to remain flat-ish for the next 12 month at least, before the company could grow into its valuation. In the mean time, many things can derail the story (regulation, corporate buyout, the rise of a well capitalized competitor, new technology, recession etc.). Risk-reward not there to initiate new position IMO.

[Barefoot]

The stock rises 31.39% percents yesterday after release of 4th quarter and 2018 results with further acceleration of revenue instead of a slowing down that almost all analysts expected.

I am not sure whether to sell it now since I only enter this position around same time that I started this thread. One thing I know is that high growth stocks can stay overvalued for a long time. I am making an exception for this one but I am only holding a small position.

[Wildreamz]

https://www.fool.com/investing/2019/02/2...d-mom.aspx
The Trade Desk's Fourth Quarter Highlights Wild Momentum
Feb 22, 2019 at 9:01AM

Accelerating growth
After the company reported third-quarter year-over-year revenue growth of 50% (down from 54% revenue growth in Q2), it only seemed natural to expect a further deceleration in the uncanny revenue growth rates in Q4. This is why it wasn't surprising when management guided for fourth-quarter revenue of $147 million, implying 43% year-over-year growth.

On average, analysts expected fourth-quarter revenue of about $147.8 million. But those estimates were far too low. Even the analyst with the highest estimate for fourth-quarter revenue -- $150.8 million -- undershot significantly. The Trade Desk reported fourth-quarter revenue of $160.5 million. This was up 56% year over year, marking a meaningful acceleration over the company's third-quarter revenue growth rate.

The Trade Desk also saw a huge jump in profitability. Net income for the period was $39.4 million, up from $16.8 million in the year-ago quarter. On a per-share basis, it earned $0.84, up from $0.38 in the same period last year. Non-GAAP earnings per share soared 102% year over year to $1.09, obliterating analysts' average forecast for non-GAAP earnings per share of $0.80.

..

Sure enough, these same catalysts helped deliver more strong year-over-year growth in Q4.

• Mobile spend increased 69%
  
  
• Connected TV soared 525%
  
  
• Audio grew 230%
  

---

Yes, the surge in stock price certainly caught me by surprise, though the rise in programmatic, podcasts and connected TV didn't. Continued success of the Trade Desk, hinges upon whether hyper-scale walled garden platform like Google and Facebook will dominate the entire internet entertainment/ad sphere, or marketplaces, like The Trade Desk has a place to succeed.

The Trade Desk: Marketplaces Win, Walled Gardens Don't
Sep. 25, 2018
https://seekingalpha.com/article/4208157...ed-gardens

(vested)

[Barefoot]

It's better to change the title of the thread to "The Trade Desk".

Have been invested in it for quite some time (since 2017?). Looks like it is on track to become the third largest player in the ad-tech space. It is also highly profitable, growing both topline and bottom line at 50-60% for the longest time.

But it's current valuation (trailing PE ~100?) doesn't look like one that would interest fellow buddies, hence, never thought of starting a thread here.

Hi, Do you mean facebook and google as the two largest ad-tech? What is your estimate eventual potential valuation for ttd?

[Wildreamz]

@Barefoot 

Yes, $TTD is indirectly competing with $FB and $GOOGL in the long run, as more and more user attention, time spent online aggregate among the platforms owned by the 2 largest player in Ad Tech right now (Facebook, Instagram, Youtube, Google, Whatsapp etc.), ad-dollars will follow. Twitter, Bytedance (TikTok), Netflix, Amazon (Twitch, Prime Videos), Apple (iMessage, News App, Original Content) and gaming companies (EA, Tencent) are also going to continue to compete for time spent online (although not necessarily competing for ad-dollars directly).  TTD's continued success hinges upon walled-garden online/content company do not keep grabbing all possible market share, and cut everyone else off.

In addition to competing with others in the DSP space.

If we live in a future where the internet is owned by a few oligopolies, TTD is going to falter.

As for where do I see the ceiling for TTD, honestly I don't know.. We could use Facebook's growth history as a proxy, in the early days 2012+ Facebook was also growing revenue at a pace of 50%+ (albeit from a MUCH higher base). At that point, they were valued at 10-20x trailing PS ratio.

Right now TTD has a TTM revenue of $477m, growing at 50-60%, market cap of $8.6b (share price = $195), PS ratio (TTM) of ~18x. Net income margin (latest quarter ~24.5%). 

Are they going to be the next Facebook in terms of size.. probably not.. But if they could sustain the current growth trajectory for 5 more years (like Facebook did last 5 years) then I'd expect the returns to be similar.. (2-4x from here in 5 years from current valuation).




Sources: Macrotrends, Seeking Alpha, Wolfram Alpha

Big IF, 2c. Vested, so biased.

[Wildreamz]

Taking a trip down memory lane and revisiting some of my old predictions.

TTD just announced recent earnings, revenues grew +101%: https://www.investors.com/news/technolog...ws-q22021/

TTD now trades at ~38x trailing PS ratio (up from 17-20x just a few years ago).

The company has 4x in just 2.5 years, far exceeded my prediction of 2-4x in 5 years.

Some of the contributing factors, IMO:
* Covid-19: the business has proven to be anti-fragile, and continues to be resilient despite of the public health crisis. In fact, Covid has in many ways accelerated the digitalization across the globe (ie digital ad spend).
* Expanding margins; net margins has expanded from 16% to about 29%; hence, net income actually grew faster than revenue (which grew less than I expected)
* Privacy-focused ad-tech, currently receiving a tail-wind (https://seekingalpha.com/article/4415074...less-world) 

Risk factors:
* Same as 2.5 years ago, if the internet (ie our attention and screen time) would be monopolized by a few internet giants' walled-gardens (Netflix, Facebook, Google, TikTok etc.); then TTD will be in trouble. TTD's greatest strength (not owning any digital content like Netflix) will also be it's greatest weakness.
* High valuation.

Is the valuation stretched? Absolutely. I will not be adding more at current valuation (might be a mistake if it continues to exceed expectations). 

IMO, if you you are lucky to have bet on the right Jockey/Market Trend/Great Business; best not to tempt fate by trading in and out of winning positions.

Still believe that TTD has the potential to become the 3rd largest player in Ad-tech behind FB and Google, some years down the road. A long shot, but if true, today's ~$40bil market cap may still be a bargain.

Peace.

(vested)