Trade Desk Faces Steep Drop in Shares After Weak Earnings Report

Shares in Trade Desk (ticker: TTD) took a massive hit in premarket trading on Friday, dropping by 25%, following the release of the company's earnings report. The report, which revealed a weaker-than-expected outlook, rattled investors and resulted in a significant decline in the stock's value.

According to Trade Desk's fourth-quarter revenue projection, the company expects to generate "at least $580 million." However, this falls short of analysts' consensus estimate of $610 million. Additionally, earnings are also projected to be below consensus estimates.

Despite this discouraging news, analysts on Wall Street are maintaining a positive outlook on the stock. They believe that the recent slide in share prices presents an attractive buying opportunity for investors. Jason Helfstein, an analyst at Oppenheimer, stated, "Buy the dip on temporary ad headwinds," suggesting that the current advertising challenges are only temporary and not indicative of long-term performance.

In agreement with Helfstein's view, analysts have slightly adjusted their price targets for Trade Desk but have retained a bullish rating on the stock. Helfstein reaffirmed his Outperform rating on Trade Desk, lowering the price target from $95 to $85.

Despite acknowledging the advertising headwinds faced by Trade Desk, analysts remain confident in the stock's potential. They speculate that the recent decline in share prices, driven by the disappointing outlook, may have resulted in overselling and that the stock may be undervalued. This perspective suggests that Trade Desk shares may present a valuable buying opportunity for savvy investors.

Market Analysis Highlights Potential Opportunities for The Trade Desk

As the market faces challenges with limited visibility and uncertain sentiment, experts believe that The Trade Desk remains on a positive trajectory despite temporary setbacks. Ygal Arounian from Citi maintains a Buy rating for the company, emphasizing that core secular tailwinds are still intact. With a price target of $68, Arounian suggests that the current macro factors causing dislocation could serve as a buying opportunity for investors.

Similarly, Matthew Swanson, an analyst at RBC Capital Markets, shares a bullish long-term perspective on The Trade Desk's strategic growth potential. Swanson adjusts the price target to $90 from $100 while holding an Outperform rating.

Justin Patterson, an analyst at KeyBanc Capital Markets, agrees that the recent setback faced by The Trade Desk is merely a temporary "speed bump" rather than a structural issue. Although Patterson trims the price target to $84 from $100, he maintains an Overweight rating for the stock. He acknowledges that they underestimated the impact of the brand advertisement spend pause on The Trade Desk. However, Patterson believes that if the majority of the revenue revision is attributed to transitory factors, it paves the way for a clear path toward reaccelerating growth.

Despite the challenges faced in the market, experts are optimistic about The Trade Desk's future prospects. The company has the potential to navigate through these headwinds and continue its growth trajectory.