- Benchmark Analyst Mark Zgutowicz downgrades The Trade Desk, Inc. TTD out of Hold to Sell with a price target of $38.
- Following CEO Jeff Green’s upbeat outlook for Q1 and broad outlook for 2023 in Q4, the analyst believes buy-side expectations have been downgraded to unsustainable levels, while overly optimistic consensus expectations are being eclipsed.
- While CTV commercial break growth remains relatively healthy and is estimated to support ~40% of TTD’s gross spend over the next two years, non-CTV development (e.g. mobile and display) isn’t looking healthy according to its channel reviews.
- The analyst also thinks growth expectations for the buy-side CTV are overblown for 23 after an unusually strong price Q4 implied 40-50% growth.
- The analyst sees increasing risks of TTD data/signal loss over the next 18 months Apple Inc AAPL Fingerprinting/Private Relay Decision and alphabet inc GOOD Google Google’s decision on GAID (Google Ad ID) and Chrome cookies.
- Related: Trade Desk receives price target increases from analysts after upbeat Q4 results
- The analyst strongly believes that UID2 will provide little to no respite for future signal losses, with negative impacts on the TTD final value without large UID2 commitments for publishers, regardless of a growing list of UID2 ad tech vendor partners.
- Eventually, as rates continue to rise, the analyst sees a waning appetite for TTD stocks in risk-adjusted portfolios with a ~14x NTM sales multiple, rising, high beta, and still high exposure to the US. The latter should soon switch from tailwind to headwind.
- also read: You Ask, We Analyze: Here’s the bull and bear case for Trade Desk as the stock moves higher
- Price promotion: TTD shares traded 3.73% lower at $56.05 on the last check Thursday.
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