To The Moon

In today's edition, we will track the fundamental readings of long-term bullish companies in strong (TigerTrade Top 1 Gainer) concepts each week and look forward to your attention and discussion.

Disclaimer: Capital at risk. This is not direct financial advice or a recommendation to acquire or dispose of any investment, but for communication only.

2 of the 3 indexes closed red last week. $NASDAQ(.IXIC)$ (+0.59%) led, and $S&P 500(.SPX)$ (-0.28%) lagged. The 5 best-performing industries of last week are advertising, tires & rubber, textiles, broadcasting and wireless telecommunication services.

These four stocks all had strong moves last week. Considering the different perceptions of the stock, this time TigerPicks choose $Trade Desk Inc.(TTD)$ to have a fundamental highlight to help users understand it better.

$Trade Desk Inc.(TTD)$

If you want to invest in Ad Tech, The Trade Desk can be your top pick. TTD is a leading pure-play Demand Side Platform serving digital programmatic ad buying over the Open Internet on the globe.

TTD is a unique company because 1) it is serving Ad buying over the Open Internet (as opposed to the Walled Gardens); and 2) it is a pure-play DSP as opposed to a Conglomerate. TTD's unique positioning has turned into its advantage.

Shares of Trade Desk surged on last Wednesday after the advertising-technology company issued an upbeat outlook that helped quell fears about the digital-ad market.

Chief Executive Jeff Green spoke positively on the earnings call about the company’s performance relative to rivals, saying that the company grew 24% in the fourth quarter while most of its “large competitors” saw negative growth.

Trade Desk’sTTD revenue rose to $491 million from $396 million, while analysts tracked by FactSet were modeling $490 million.

Below are the key factors that may affect $Trade Desk Inc.(TTD)$ s' future price, also Tigerpicks gathered the target price forecasts for the future 12 months for your concern but not for trading advice.

1. Growth areas

2. Financial performance

3. Trade Desk's Pure-play DSP Advantages

Growth areas

CTV is The Trade Desk's most fertile growth area. Companies that aren't advertising on streaming television are missing a massive market. And more streaming services, like $Netflix(NFLX)$ and $Walt Disney(DIS)$, are realizing they need ad-supported subscription tiers to profit.

The Trade Desk reaches 90 million households and even more streaming devices. It also offers targeted ad buying and helpful reporting of key performance metrics.

Shopper marketing is also taking off. The Trade Desk partnered with $Wal-Mart(WMT)$ to create Walmart's DSP, Walmart Connect, and partners with $Target(TGT)$, $Walgreens Boots Alliance(WBA)$, and others, helping maximize sales of their online and in-store ad space.

"They recently published a story about how Coca-Cola, one of the world’s largest advertisers, is thinking about shopper marketing. They are activating campaigns across more than 25 retail media networks...Since Coke started building out its retail media strategy a few years ago, it has seen a major uptick in return on ad spend and incremental reach...across more than 130 million households in the United States. This approach has helped the company better pinpoint audiences in targeted channels like programmatic display, connected TV, and social media.

As I said last quarter, we now provide access on our platform to about 80% of the leading retailers in the United States, and we are growing our international footprint every month. " According to Jeff Green, The Trade Desk Founder, and CEO.

Financial performance

The company produced nearly $1.6 billion in sales in 2022, with 32% growth, as shown below.

Data source: The Trade Desk

Revenue growth is phenomenal but not the only reason for optimism.

The Trade Desk is GAAP profitable (even during its growth phase) and a capital-light business - massive cash outflows for property and equipment won't burden it. As the company grows, free cash flow will balloon.

Cash from operations has grown from $405 billion in 2020 to $549 billion in 2022.

The company has no long-term debt, and cash and investments of nearly $1.5 billion. The fortress balance sheet was created with a giant boost from the stock-based compensation (SBC) given to founder and CEO Jeff Green. Many shareholders dislike SBC, so The Trade Desk isn't for everyone. But when a company is uber-successful, this feeling dissipates. I doubt many early investors in Amazon (AMZN) worry about Jeff Bezos's wealth.

Aside from saving cash, SBC aligns management and employees with shareholders - we all make more money when the stock price rises. It was encouraging that The Trade Desk introduced a $700 million stock buyback program last quarter. This is a standard way that large companies negate the dilutive effects of SBC and reward shareholders.

Trade Desk's Pure-play DSP Advantages

First, TTD remains nearly intact post IDFA thanks to its efforts on UID 2.0. UID 2.0 is an industry-wide approach that leverages email-based identifiers to enable targeted advertising without reliance on third-party cookies.TTD self-reported that "while the messaging and creative was the same for all strategies, the click-through rate for UID2-based display ads was 2.9 times higher than for The Trade Desk's non-UID2 ads. The cost per acquisition for the UID2-based segment was $1.60 compared to $5.37 for non-UID2-based segments (a 2.4 times improvement)."

UID 2.0 has kind of united all efforts in enabling richer data (as opposed to competing and isolating from each other) on the Open Internet side. The partnership between TTD and LiveRamp is one example. Another evidence is that UID 2.0 is transitioning from TTD to independent governance.

Second, TTD as a pure play is the best partner that others, e.g. Streaming Services, and Retail Media Networks, are eager to go after without worries of competition. In Aug-21, Walmart Connect launches its brand-new DSP (built in partnership with TTD) to expand offsite offerings to advertisers. In Jul-22, Disney announced its agreement with TTD as part of its bold vision in CTV. The Ad Tech ecosystem may continue to evolve through competitions and consolidations, and TTD, in its unique position, will continue to see many ways to collaborate with winners along with the industry's evolution.

Third, TTD as a pure play is more aligned with buyers (advertisers and agencies). Unlike the Walled Gardens players, TTD does not sell any media, and does not arbitrage over media. Its platform is all in a Self-service manner, which means buyers operate the platform and reporting tools for best ROAS. All the transparencies helped TTD gain trust as well as allocated budget from buyers.

Stock Price Forecast:

Here are the target price forecast for the future 12 months from analysts on CNNMoney.com.

The 21 analysts offering 12-month price forecasts for Trade Desk Inc have a median target of 75.00, with a high estimate of 90.00 and a low estimate of 27.00. The median estimate represents a +24.38% increase from the last price of 60.30.

Hope this analysis helps you get more understanding of the company's whole image, Tiger Picks will follow up the monthly performance as a longterm track.

Resource:

https://seekingalpha.com/article/4566837-the-trade-desk-better-profitability-and-bigger-scale-ahead

https://seekingalpha.com/article/4579877-how-the-trade-desk-could-boost-a-lucrative-retirement

What are your thoughts on $Trade Desk Inc.(TTD)$?

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