Ca$htag$: The Trade Desk (TTD) Market Narrative Too Bullish

0:00Welcome back fast market. This is the Schwab Network and I'm glad you are with us I'm alongside Tom White and we're taking a look at the trade desk because these shares have fallen almost 30% since the beginning of the year and that is the topic for today's cash tags for that we bring in land and swan co-founder of like folio this stock is it really has been hit hard overall it is really taking a turn to the downside we noted how it's down about 30% year to date some of your thoughts on this name yeah this is a tough one I mean if you if you zoom out to the two-year chart it was pretty wild ride I think you know people got pretty optimistic there for a while and then you know our data turned to the downside unfortunately and the stock followed and it's you know it's had some very volatile bumps along the way up and down just recently when the CEO announced he was buying six million shares and they had talks with open AI they ran up from I think 25 to 32 we've since pulled back to 27 and this is I think just kind of a case of you know everything going right for a while and those

1:04PE multiples are getting you know larger and larger and everyone's pricing in the best case scenario and then when that doesn't happen that contraction can can snap back very quickly so this that's that's basically what's happened here I mean when you look at their 24 2024 revenue is plus 26% their 25 was plus 18% their last quarter was plus 14% so they're gaining but they're decelerating they're going in the in the wrong direction that's sort of the bad news I think that everyone knows and now I guess the question is you know how are they priced now is it fair you know is this you know are we heading to the upside how's the data look and that's why we're here and you know I can tell you that the data has it's definitely pulled back significantly since those highs but it is starting to flatten out to a degree the bleeding is slowing definitely it's still on the wrong side of things as you can see here with that negative 5% on a year-over-year basis while some of the I don't know if this is exactly competition but some of the the competitors who serve ads are doing better now obviously there's a lot more that goes into you know consumer

2:08demand web website visits for meta and Google Amazon and trade desk trade decks is pretty specific as a you know as a demand side ad platform and those others are not but they do sell ads they are you know their business model obviously is sound they've got 41% margins and they've they've got a very high customer retention I think 95% especially boosted from their AI platform I think it's called co-chi and it's you know it's been doing incredible things for the customers better a cost per acquisition by about 26% better cost per reach by about 58% so they're doing very well delivering to their customers it's just a matter of things not growing as quickly as they were in that price to perfection snapping back when people realize that perfection isn't there for TTD yeah Landon you know it's just a competitive thing the CEO and founder just came out he bought a hundred and fifty million dollars with a stock in this basically you know putting you know I think it's one of the biggest

3:11buybacks in the in the history or or you know executive buying their shares so that should give you some confidence the open AI potential partnership I mean just look at this eighty percent off of those all-time highs for this stock it's like you know is it cheap on a valuation basis where hey maybe it shouldn't be worth twenty seven bucks maybe it should be worth thirty five bucks but just still you know far below it's all-time highs because it seems like the competitive pressures are taking a lot of maybe the the outlook away from this company yeah I think what I think there's some competitive pressure for sure people going direct to source as opposed to to using their platform but there's also some advertiser confidence issues and we're seeing that in our data it's obviously it's a much smaller sample size but advertisers are less confident they're they're you know watching where they spend they're really tracking things more closely they want to see that ROI I think they get it from TTD they get the ROI they get strong numbers but just overall they're

4:13probably spending less which is you know making things a little bit more difficult for trade desk but you're right if you're looking for you know a signal of confidence the CEO putting in a hundred fifty million the company up in their buyback program to up to five hundred million these you know these these things that you do when you're confident in your company and so at these prices I think the CEO and the company themselves are basically saying we think we're very undervalued here I think their PE ratios now around thirty so it's not ridiculous but for a tech company that's fairly low especially when you look at where they were and again they're continuing to grow it's just that growth rate is slowing which nobody wants to see and you can sort of see the the downtrend in the data here this blue line that's our data the the dotted line is the stock price so you know we moved a lot lower a few months before it the stock has but we've baselineed out now I mean we are we're down on a year over your basis but when you look and you kind of zoom in a little bit we're pretty flat it feels like in a data world it feels like we're

5:14kind of at the bottom and this could be a bit of a bottom for the stock so longer term I think that you know I think it's justified to be bullish here at these prices twenty seven dollars or whatever it's trading on it's pretty low and when you look at how well the you know just the all the things that they're doing for their customers again ninety five percent retention they've got incredible statistics for cost-backed acquisition cost per reach they've got really interesting and in dynamic ways of targeting people by a hashed email where you can you still have privacy but you're still getting ads that are served to you based on what you do on other platforms even outside of trade desk so they know what you like and they're targeting you that's how they're able to make their advertisers so happy is because you're serving relevant ads to people who are more likely to buy so they're doing great things it's just again their growth got slowed and nobody wants to see that so at this point you kind of got to ask yourself you know where is the stock headed and and I think that based on the day that we see this could potentially be a bottom you know

6:15we track two numbers main street and wall street numbers and the wall street number is twenty four out of a hundred in other words investors are pretty bearish on it the main street number sixty seven out of a hundred not incredible but still that difference tells us that the consumers and the advertisers like this platform in this service much more than the investors do right now lendons want it's great to see you thank you so much co-founder of like folio we appreciate your look there