3 Reasons The Trade Desk Stock Is a Must-Buy for Long-Term Investors

Core Viewpoint - The Trade Desk's stock has experienced a significant decline of nearly 50% since the beginning of 2025, despite a long history of creating shareholder value since its IPO in 2016, where it has gained approximately 2,000% in value overall [1] Group 1: Company Performance - The Trade Desk has consistently outperformed its financial guidance, indicating strong demand forecasting capabilities and a focus on building trust with investors [2] - In Q4 2024, the company reported revenue of $741 million, which was below its guidance of$756 million, marking the first time in 33 quarters that it fell short of expectations, leading to investor doubt [3][4] Group 2: Market Opportunity - The Trade Desk operates in the programmatic advertising space, which allows for better targeting of consumers, providing better results at lower costs for advertisers [6] - The company is experiencing rapid growth in connected-TV (CTV) as the market shifts from linear TV to streaming, with many services incorporating ads [7] - The total addressable market for The Trade Desk is estimated to exceed $935 billion, while its current market control is around$12 billion, indicating significant growth potential despite competition from major players like Alphabet and Meta Platforms [8] Group 3: Track Record and Management - The Trade Desk has a strong track record, having outperformed its guidance in 32 out of 33 quarters, suggesting that the recent quarterly miss may be an anomaly rather than a trend [10] - Management believes that the recent shortfall was self-inflicted due to organizational challenges related to scaling, and they are optimistic about restoring investor trust [11][12] Group 4: Valuation - The valuation of The Trade Desk is becoming more attractive, with stock prices down about 50% from long-term averages based on price-to-sales and price-to-free-cash-flow metrics [13] - While the stock may not appear cheap from a traditional value-investor perspective, its high growth rate could indicate long-term value creation potential [14] Conclusion - Despite potential risks, The Trade Desk is pursuing a substantial market opportunity, has a strong historical performance, and is currently at a relatively attractive valuation, making it a compelling option for long-term investors [15]