Has The Trade Desk Stock Found Its Floor?

The Trade Desk US88339J1051

Shares of advertising technology specialist The Trade Desk are trading near multi-year lows, having shed approximately 74% of their value since the all-time high. This dramatic decline presents a stark contradiction to the company's reported operational performance. With the fourth-quarter earnings report on the horizon, investors face a pivotal question: does the slump reflect fundamental business risks, or is it a market-driven overreaction?

A review of the underlying business reveals a significant disconnect from the share price trajectory. In Q3, The Trade Desk increased revenue by 18% year-over-year to $739 million. A primary growth engine has been its AI-powered platform, Kokai, which is experiencing particularly strong demand in the Connected TV (CTV) segment.

Two key metrics highlight the resilience of the company's model:
* Customer Loyalty: The company has maintained a customer retention rate consistently above 95% for eleven consecutive years.
* Capital Return: Management capitalized on lower share prices in the third quarter by repurchasing $310 million worth of stock and subsequently authorized an additional $500 million buyback program.

Despite the fall to a current price near $36.56, the valuation remains premium. With a market capitalization of around $18 billion, the stock trades at a price-to-earnings ratio of approximately 42.

Awaiting the Quarterly Report

Investor attention is now firmly fixed on the upcoming Q4 2025 results. While algorithms from some financial data providers suggest a February 11 release, TipRanks indicates the confirmed date is likely February 18, 2026, after market close. Official confirmation on the company's investor relations site is still pending.

Management's most recent guidance projected revenue of at least $840 million for the quarter. This would represent year-over-year growth of about 13%. When adjusted for the unusually high political advertising spend in the prior-year period, the underlying growth rate is estimated to be closer to 18.5%.

Strategic Initiatives and Future Outlook

Strategically, the company is advancing its "OpenAds" initiative, which aims to create a more efficient supply chain for digital media. On January 6, The Trade Desk announced the first wave of partners for this program.

The upcoming earnings call will be crucial for clarifying two main points: how profit margins are evolving as the platform scales, and what guidance management provides for the full 2026 fiscal year. Analysts are expected to scrutinize the organic growth momentum, especially without the cyclical boost from political election advertising.