Investing.com — The Trade Desk reported second-quarter revenue slightly ahead of consensus and adjusted EBITDA of $271 million, beating guidance by about $10 million.
Management credited the performance to Kokai, with roughly 70% of client spend now on the platform.
Despite the results, Wedbush downgraded The Trade Desk (NASDAQ:TTD) to Neutral from Outperform in a note on Friday, cutting its price target to $68 per share, citing “rising competitive intensity (primarily versus Amazon (NASDAQ:AMZN) DSP)” and concerns over its relationships with key agency partners and the long-term market size.
TTD shares have plunged more than 38% on Friday.
Wedbush noted “multiple reports in recent months suggesting Amazon has more aggressively improved its DSP capabilities,” with several marketers shifting budgets from The Trade Desk.
Amazon’s June integrations with Disney (NYSE:DIS) and Roku (NASDAQ:ROKU) opened access to premium CTV inventory, which Wedbush said “validates the strength of its DSP and suggests The Trade Desk’s value proposition could erode over time.”
The firm also highlighted management’s increased platform investments, projecting 2025 adjusted EBITDA margin to decline about 175 basis points after expanding 169 basis points in 2024.
Revenue growth in 2025 is now forecast at 17.4% year-over-year, down from earlier expectations of around 21%, with macro uncertainty and potential regulatory changes limiting visibility for the second half.
While Wedbush still expects The Trade Desk to benefit from the shift of TV ad budgets to CTV and programmatic, it now anticipates a “slower long-term trajectory” and warns that the company may require increased investment if competitive pressures intensify.
At around 22 times Wedbush’s revised 2026 adjusted EBITDA estimate, the brokerage said the valuation premium to peers was “unwarranted.”
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