The Trade Desk: Buy TTD Stock Now At $65?

Core Insights - The Trade Desk's stock experienced a 29% decline in after-hours trading despite strong quarterly results, primarily due to a slight miss on Q3 guidance and the unexpected departure of the CFO [2][3] - The stock has seen a significant rally of nearly 20% over the past thirty days following its addition to the S&P 500 index [2] Financial Performance - The Trade Desk's revenue has grown at an average rate of 25.8% over the last three years, significantly outpacing the S&P 500's 5.2% growth [7] - Quarterly revenues increased by 19% to $694 million from $585 million year-over-year, compared to a 4.3% increase for the S&P 500 [7] - The company's operating income over the last four quarters was $475 million, with an operating margin of 17.7% [15] - The operating cash flow for the same period was $929 million, indicating a high cash flow margin of 34.7% [15] - Net income totaled $417 million, reflecting a net income margin of 15.6% [15] Valuation Metrics - The Trade Desk has a price-to-sales (P/S) ratio of 13.1, significantly higher than the S&P 500's 3.0 [7] - The price-to-free cash flow (P/FCF) ratio stands at 42 compared to 20.6 for the S&P 500 [7] - The price-to-earnings (P/E) ratio is 75.6, while the S&P 500's is 22.6 [7] Financial Stability - The Trade Desk's balance sheet is described as extremely robust, with a debt figure of $344 million and a market capitalization of $32 billion, resulting in a low debt-to-equity ratio of 1.1% [15] - Cash and cash equivalents amount to $1.7 billion, constituting a cash-to-assets ratio of 28.3% [15] Market Position and Outlook - Despite the current high valuation multiples, The Trade Desk's performance is consistent with high-growth advertising firms, with an average price-to-sales ratio of 24x over the last four years [11] - The stock's recent decline presents an attractive entry opportunity for investors [11] - The Trade Desk's performance across key financial metrics is strong, although it has shown weak resilience during economic downturns [16]