Stock Market

The Trade Desk (NASDAQ:TTD) stock has had an exciting year. TTD stock was one of the biggest winners of this recent cycle. The share price quintupled off the Covid-19 lows within a year.


The Trade Desk took advantage of the huge run-up to reward shareholders with a massive 10:1 stock split. In addition, the internet advertising industry looks set for massive growth again in 2021 after a sharp slowdown last year. Everything appears to be firing on all cylinders for The Trade Desk.

And yet, TTD stock had gone cold for much of this year. Between December 2020 and May, TTD stock essentially halved from the highs, with the stock slumping from $97 to $48 on a post stock-split basis.

Now, though, the pendulum is back on the upswing. TTD stock has soared more than 50% since the May low. That includes a stunning 16% one-day surge on June 24 thanks to positive news out of Alphabet (NASDAQ:GOOGL) on its policy toward tracking cookies. So what are investors to make of TTD stock after the incredible volatility?

Great Times for TTD Stock… for Now

In May, The Trade Desk reported Q1 earnings. By all accounts, it was a tremendous quarter. The company posted $220 million in quarterly revenues, up 40% year-over-year.

This was excellent growth, given that the online advertising industry had its slowest spell post-pandemic that it had seen in ages. U.S. digital ads only grew in the low double digits last year and some other key markets, such as the U.K. saw growth of just 5%. Given this difficult environment, a company like The Trade Desk could only maintain huge revenue growth by taking share from rivals. So the company’s results are impressive to say the least.

The company also reported $1.41 of EPS (using pre-stock split figures) which was way ahead of consensus 81 cents. Yet TTD stock dove on the news. What happened? For one, the company failed to release net income or EBITDA guidance due to some accounting details. That’s not a big deal, though. The bigger issue was that investors feared how 2022 earnings would look.

That’s because Google has planned to wind down use of third-party cookies in early 2022. When this happens, it will greatly reduce the ability of third-party marketers to collect tracking data on users and subsequently serve up targeted ads. While The Trade Desk is growing like a weed now, after 2022, investors feared the worst.

However, Google recently announced that it won’t be eliminating cookies until at least late 2023. This caused a massive rally in TTD stock along with other online advertising names.

Don’t Overestimate the Cookies News

Google’s delay on tracking cookies is no doubt a big positive for The Trade Desk. So don’t take this point incorrectly; TTD stock is up and deservedly so on the news.

However, the key takeaway is that this is a two-year reprieve, not a permanent change. A Google employee stated that: “It’s become clear that more time is needed across the ecosystem to get this [tracking browser behavior] right.” Google still wants to shift away from the third-party cookies that help power The Trade Desk’s business. However, it will take a lot more time to make the switch, and that should allow The Trade Desk to enjoy another two years of outsized growth in the interim.

The problem is, however, that most of the value in a stock like TTD is in its future years. The Trade Desk isn’t making much in the way of profits or positive cash flow today or even next year. You buy a stock like this because you believe it will be huge in 2030 or 2040. In light of that, whether or not The Trade Desk makes more money in 2022 based on fast-changing privacy rules is not especially material to the company’s long-term value. Enjoy the big bump in TTD stock’s short-term outlook, but don’t lose sight of the bigger picture.

TTD Stock Verdict

The Trade Desk had an incredible 2020. Given that, it’s no wonder that investors got a little too excited about TTD stock earlier this year. However, the valuation has become a lot more reasonable now, the recent rally notwithstanding.

That’s not to say that TTD stock is cheap here by any means. At 40 times trailing sales, you still have to have a lot of faith in the business model and management to invest at this time. Still, The Trade Desk is growing so quickly that shares are unlikely to ever go for a truly knock-down price. As such, if you’ve been on the fence about the stock, this might be a decent time to start scaling into a position.

On the date of publication, Ian Bezek did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the Publishing Guidelines.

Ian Bezek has written more than 1,000 articles for and Seeking Alpha. He also worked as a Junior Analyst for Kerrisdale Capital, a $300 million New York City-based hedge fund. You can reach him on Twitter at @irbezek.