Trade Desk Stock Is Too Expensive, Wait for Correction

Trade Desk stock price is down significantly from its all-time high of $970 amid investors profit taking strategy. Despite that, the shares of the digital advertising technology company look significantly overvalued due to the rally of 186% in the last twelve months, pushing the price to earnings ratio to 174 times.

The investors haven’t also reacted to stronger-than-expected results for the December quarter. Its fourth-quarter revenue of $319 million increased 48% year over year and topped the Wall Street consensus estimate by $27 million.

The Trade Desk, Inc Stock Quote

Co-Founder and CEO of The Trade Desk, Jeff Green said.

We won more share in our fastest-growing channels such as CTV and Audio, which helped drive record ad spend of $4.2 billion on our platform in 2020. Perhaps just as important, in 2020 we saw several years of advertising disruption and innovation compressed into a few months. Marketers are being more deliberate and data-driven in everything they do, and as a result, they are gravitating to the advertising opportunities of the open internet.”

Sluggish First Quarter Outlook Impacted Trade Desk Stock

Trade Desk stock price fell almost 2% after the company announced first-quarter revenue guidance in the range of $214 million and $217 million, down significantly from the previous quarter’s revenue of $319 million. The company blames the COVID-19 pandemic for a lower revenue outlook. The company expects an adjusted EBITDA of around $55 million for Q1 compared to $155 million in the previous quarter.

Trade Desk stock price is likely to see a big price correction in the days to come because its valuations and financial numbers are not supporting share price gains. Thus, investors should wait for a better entry point.

Siraj Sarwar - Lead Analyst
@tradethedayfx
Siraj Sarwar has been performing analysis on the stock market, equity research and general business consultation. He regularly contributes articles on economics, commodities, and equities to the world's leading websites, including Trade the Day, SeekingAlpha, TheStreet, and MSN.
0

Comments

Leave a Reply

Your email address will not be published. Required fields are marked *