Trade Desk plummets on muted forecast as ad sales slow into holiday quarter

Trade Desk, which runs a programable ad sales platform for key media and retail companies, forecast sharply slowing revenues over the final months of the year.

Nov 10, 2023 - 19:30

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Trade Desk plummets on muted forecast as ad sales slow into holiday quarter

Trade Desk TTD shares are set to shed more than $9.4 billion in value Friday after the digital ad platform cautioned investors that sales would slow into the final months of the year amid a pullback in corporate marketing spend.

Trade Desk, which has a commanding share of the programable market for connected TV advertising, topped Street forecasts with third quarter earnings of around $200 million, or 33 cents per share on revenues of $493.3 million.

However, the group said revenues would slow to around $580 million over the final months of a year, compared to analysts' estimates of around $611.5 million, during a time when companies normally ramp-up marketing efforts as part of their holiday season sales drive.

"We represent the vast majority of the Ad Age top 200 advertisers, the largest advertisers in the world. Starting in the second week of October, we have seen some transitory cautiousness across some of those advertisers," CEO Jeff Green told investors on a conference call late Thursday.

"These include, for example, industries that have been impacted by recent strikes such as the U.S. auto industry, "he added. "Through the first week of November, we have seen spend stabilize and we are optimistic for the remainder of the year and for 2024."

Trade Desk share were marked 25.6% lower in pre-market trading to indicate a Friday opening bell price of $57.15 each, a move that would still leave the stock up nearly 30% for the year.

"We underappreciated the degree to which Trade Desk would be caught in the brand ad spend pause that social advertisers experienced," said KeyBanc Capital Markets analyst Justin Patterson, who carries an 'overweight' rating with a reduced $84 price target on the stock.

"However, if we assume the bulk of the revenue revision is from transitory factors, The Trade Desk now has a clear path toward reaccelerating growth against depressed estimates and a valuation near the low end of the three-year range," he added.