The Trade Desk's CTV Business Driving Growth: Can the Momentum Hold?

Core Insights - The Trade Desk (TTD) is experiencing growth due to increased adoption of Connected TV (CTV), which is central to its growth strategy [1][10] - Video advertising, including CTV, accounted for a high-40s percentage of TTD's total business in the last reported quarter [2][10] - TTD's new Ventura Operating System aims to enhance efficiency and transparency in CTV advertising [3][10] Company Performance - TTD is capitalizing on the shift from linear to programmatic CTV, with CTV being referred to as the "kingpin of the open internet" [2] - The current ad landscape shows supply outpacing demand, creating a buyer's market, particularly in CTV [2] - TTD's shares have declined by 40.6% year to date, compared to a 9.3% decline in the Internet – Services industry [11] Competitive Landscape - Competitors like PubMatic and Magnite are also benefiting from the growth in CTV, with PubMatic's CTV revenues increasing over 50% year over year [5][6] - Magnite reported a 15% increase in CTV's contribution, representing 43% of its total contribution ex-TAC [7][10] - The competitive environment is intensifying, with major players investing heavily in CTV capabilities [5][7] Economic Context - Increasing macroeconomic uncertainty and trade tensions may negatively impact TTD and its competitors by squeezing advertising budgets [4][10] - TTD has noted the potential impact of macroeconomic conditions on large global brands, which could affect revenue growth if conditions worsen [4][10] Valuation Metrics - TTD's shares are currently trading at a forward price/earnings ratio of 35.58X, significantly higher than the Internet Services industry's ratio of 17.8X [13] - The Zacks Consensus Estimate for TTD's earnings for 2025 has remained unchanged over the past 30 days [14]