Jeff Green, CEO of The Trade Desk.
Scott Mlyn | CNBC
Shares of digital ad company The Trade Desk fell 17% Friday, a day after the corporate reported third-quarter results and issued weak revenue guidance.
The corporate estimates revenue of no less than $580 million throughout the fourth quarter, but analysts were searching for $610 million, based on LSEG, formerly often called Refinitiv.
The Trade Desk’s third-quarter earnings beat analysts’ expectations each in earnings and revenue. It posted adjusted earnings of 33 cents per share, beating the LSEG estimate of 29 cents. Revenue totaled $493 million, beating the $487.04 million expectation.
Analysts keyed in on the likelihood of softer ad spending within the December quarter. The corporate said it has seen cautiousness from advertisers within the auto and entertainment industries, each of which have been affected by recent strikes.
“Despite being a market leader as the most important independent demand-side platform (DSP), we imagine TTD will not be resistant to a downturn in promoting spend,” said analysts at Wolfe Research in a note to investors.
The Trade Desk is one among many firms which have cited weaker ad spending as a reason to exercise caution or temper expectations for the fourth quarter. Meta, Pinterest and Snap all expressed concern over disrupted ad spending resulting from the Israel-Hamas war.
Wolfe Research analysts are concerned over the sustainability of The Trade Desk’s growth in connected TV, which is a big contributor to the corporate’s revenue.
“It’s unclear whether CTV can sustain the high growth it has realized within the medium term, which in our view poses a risk to TTD top-line growth which has been driven by each the broad strength of CTV and TTD’s share gains throughout the CTV channel,” the Wolfe Research analysts wrote.
Analysts at Needham say the dip is a buying opportunity.
Needham analysts said in a note to investors that The Trade Desk typically over-delivers on guidance and its fourth-quarter fundamentals don’t “threaten TTD’s winner-take-most strategic position, deep moats, or its pricing power, we’re buyers on weakness.”
“For investors who ‘missed’ TTD, today you possibly can buy the AdTech industry leader at a reduction,” they said.
— CNBC’s Jonathan Vanian and Michael Bloom contributed to this report.
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