Is The Trade Desk A Good Buy At $50?

You could certainly make money if there is a rebound! The Trade Desk (TTD) has been bludgeoned in 2025, down nearly 60% and now trading at just $50 – right at a support level where it saw meaningful rallies in each of the last five years except 2024. Yet, beneath the panic lies a juggernaut. TTD is the only pure-play titan in programmatic advertising, while giants like Google (NASDAQ:GOOG), Amazon (NASDAQ:AMZN), and Meta (NASDAQ:META) juggle their DSPs (demand-side platforms) as side hustles. Revenue still soared 22% last quarter, and with 25%+ annual growth and expanding operating margins – this isn’t a broken company. When the dust settles, $50 might look like a great buying opportunity.

Nevertheless, single stock investment carries ample risk. If you want to reduce the risk while riding the upside, consider investing in the High-Quality portfolio, which has outperformed the S&P 500 and achieved returns greater than 91% since inception.

Focused Growth Machine

• 25%+ revenue growth in last 12 months, and last 3 years annually
• Operating margin expansion to 17.5% in last 12 months, vs 3 year average of 11.7%; TTD has cloud-native infra which means margins will expand with scale
• Cash generating machine at these growth levels – with FCF margin of 26%
• Barely any debt alleviating any leverage related risk
• Pure-play and fully focused on programmatic ad buying, any other pure-play competitors are very small with <$2 Bil market cap vs $27 Bil for TTD

But Here Is The Risk

Despite the fall, TTD’s P/EBIT and P/E multiples still stand quite high at 63 and 69, respectively. High valuations can persist for long, but not forever – which is why looking at valuation in the context of growth is important. It is inevitable that multiples will shrink over the course of the next few years. The question is – can the growth in revenue and increase in margins expand profits enough to offset multiple decline such that market cap goes up? 

A quick back of the envelope calculation suggests that if TTD can grow annually at 20% over the next 3 years and expand its operating margin from 17.5% to 25%, it can expand its operating income to $1Bil+. This means that even if multiples shrink to half, and that’s saying a lot given the potential, it will give much better returns than risk-free investments. 

Paying attention to valuation as well as growth is just one of the many approaches we take while constructing the Trefis High Quality (HQ) Portfolio which, with a collection of 30 stocks, has a track record of comfortably outperforming the S&P 500 over the last 4-year period. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride as evident in HQ Portfolio performance metrics.