Why The Trade Desk Stock Slumped 37% Last Month

Core Insights - The Trade Desk is experiencing slowing growth, with a significant decline in stock price, down 55% year-to-date and 37.1% in August [1][2]. Financial Performance - In Q2, The Trade Desk reported a revenue of $694 million, reflecting a 19% year-over-year growth, with a net income of $90 million and a margin of 13% [3]. - The previous year, the company had a higher revenue growth of 26%, indicating a slowdown in growth [4]. - Guidance for Q3 projects a further slowdown, expecting only 14% year-over-year growth to $717 million [4]. Market Position and Valuation - The Trade Desk has a high price-to-sales (P/S) ratio of 10, significantly above the S&P 500 average of 3.2, despite the recent drop in stock price [7]. - The company has a gross margin of approximately 80% over the last 12 months, but has not seen substantial growth in net income margins [8]. - Comparatively, Meta Platforms achieved a 21% year-over-year growth in advertising revenue, raising concerns about The Trade Desk's competitive position [5].