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Investment Thesis
The Trade Desk (NASDAQ:TTD) has performed extremely well since going public in 2017, with the share price already up over 2,400%. The company is a leader in programmatic advertising and it is well-positioned to benefit from the ongoing expansion of the massive digital advertising market. It is also at the forefront of innovation with new technologies like UID2 and Kokai, which gives them significant competitive advantages. Thanks to the strong fundamentals, revenue continues to grow nicely despite the slowdown in the advertising market.
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Huge Market Opportunity
The Trade Desk is an advertising technology company that specializes in programmatic advertising. The California-based company operates as an independent DSP (demand-side platform) that allows advertisers to buy ad impressions on the open internet. It covers multiple digital channels including CTV (connected tv), video, audio, and more. It currently works with multiple blue-chip companies including Disney (DIS), Walmart (WMT), TikTok, and others.
Digital advertising presents a massive market opportunity, as advertisers continue to shift from physical to digital. Despite the recent momentum, digital ad spending currently accounts for around 67% of total ad spending, which leaves ample room for further expansion moving forward.
According to Statista, the global digital advertising market is forecasted to grow from $679.7 billion in 2023 to $910.2 billion in 2027, representing an upbeat CAGR (compounded annual growth rate) of 7.6%. The growth is particularly strong in segments such as CTV and social media (eg. TikTok), which have been seeing an exponential increase in popularity over the past few years.
Digital advertising has significant competitive advantages over traditional advertising, which continue to fuel to shift. For instance, it offers much greater ROI (return on investments) as advertisers have much better control over ad targeting….