Is The Trade Desk (TTD) a Buy at -30%?

TTD represents a compelling investment opportunity at current levels. The stock's 60-70% decline from peak levels has created an attractive entry point for a dominant player in the growing programmatic advertising market. While the recent revenue miss sparked concerns, the underlying fundamentals remain robust. Let’s look at the top 3 competitors and the valuation: DCF, sum of parts, exit multiple to determine if it is a buy Today:

Quality Despite the Stumble?

The Trade Desk has experienced a dramatic correction, falling from its 52-week high of $141.53 to current levels around $86-90, representing a decline of approximately 35-40%. At its worst, the stock touched lows near $40-56, marking a devastating 60-70% peak-to-trough decline.

This selloff was triggered by TTD's first revenue miss in 33 quarters during Q4 2024, breaking an exceptional track record that had defined the company's public market performance. However, the company's strong Q2 2025 results suggest this was more of a temporary hiccup than a structural issue.

Financial Performance:

Q2 2025 Highlights

• Revenue: $694M (+19% YoY, +20% ex-US political spend)

• Adjusted EBITDA: $271M (+12% YoY, 39% margin)

• Free Cash Flow: $117M (+106% YoY, 17% margin)

• Operating Cash Flow: $165M (+103% YoY)

Key Business Metrics

• Customer Retention: >95% for 11 consecutive years

• CTV Growth: Now 47.5% of total business (fastest growing segment)

• Geographic Mix: 86% North America, 14% International (growing faster)

• Platform Metrics: 3/4 of ad spend now flowing through Kokai AI platform

The fundamentals remain exceptionally strong. TTD continues to demonstrate the characteristics of a high-quality compounder: consistent growth, expanding margins, strong cash generation, and a fortress balance sheet with $1.7B in cash and minimal debt.

Valuation Analysis

Current Metrics (as of August 2025)

• Market Cap: ~$43-44B

• Enterprise Value: ~$41.6B

• Trading PE: ~104-107x (down from 12-month average of 147x)

• Forward PE: ~48x

• PEG Ratio: 1.57

• EV/EBITDA: 79x

• EV/FCF: 60x

• Price-to-Sales: ~15-16x (below 3-year average of 19x)

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