Why The Trade Desk (TTD) Collapsed by 38%

Last Friday, August 8, advertising platform The Trade Desk (TTD) lost 38.61% of its value. The CEO blamed tariff uncertainties for hurting second-quarter results and its outlook.

TTD posted revenue of $694 million (+18.6% Y/Y). This is relatively weak compared to Meta Platforms (META) and Alphabet (GOOG), growing at 22% and 36% (in net income), respectively.

The third quarter guidance is too soft. TTD stock trades at a nearly 50 times price-to-earnings ratio. The firm said that global brands offer a stable outlook, yet tariff uncertainties persist. For Q3, TTD expects revenue of at least $717 million (+14% Y/Y).

Some of the world’s largest brands face pressures. Some of them are managing uncertainty by responding more than others to tariffs. Many firms worry about inflation. The related pricing is pressuring them to cut the advertising efforts.

Corporate customers are demanding more performance-driven results. Their cautious spending will put pressure on TTD’s profit margins.

Rising Competition

Meta’s Facebook continued to dominate the advertising business with its walled garden. TTD has an open Internet, which should widen its addressable market. The company is in a good position to win more advertising business in the connected TV (“CTV”) markets.

TTD Stock Rebound

Look out for TTD stock staging a rebound in the coming days. Investors will bet that management is overly cautious in its outlook.