Is The Trade Desk Stock Finding a Floor After a Steep Decline?

The Trade Desk US88339J1051

Following a dramatic loss of nearly 68% over the past year, shares of advertising technology specialist The Trade Desk may be approaching a potential inflection point. The equity is currently trading close to its 52-week low, yet a notable shift in sentiment is emerging from a previously pessimistic quarter.

In a significant move on January 12, analysts at MoffettNathanson upgraded their rating on The Trade Desk from "Sell" to "Neutral." This change of heart did not stem from a sudden improvement in the company's operational outlook, but rather from valuation considerations. The firm now trades at a forward price-to-earnings (P/E) ratio of 34, representing its most attractive valuation since its 2016 initial public offering. The investment bank's thesis is straightforward: the downside risk appears largely priced in. With a new price target of $39, MoffettNathanson sees limited potential for further correction after the stock's severe decline, suggesting the share price now reflects the competitive challenges within the digital advertising market.

The Persistent Wall of Worry

Despite this upgrade, skepticism remains widespread across Wall Street. On a similar timeline, Wells Fargo reduced its price target from $47 to $42 while maintaining a neutral stance. Other firms, including Wolfe Research and Guggenheim, also trimmed their expectations, setting targets at $45 and $50, respectively. The core concern unifying these cautious positions is a perceptible deceleration in the company's growth trajectory.

A Mixed Fundamental Picture

The latest financial results present a dual narrative. For the third quarter of 2025, The Trade Desk reported revenue of $739.4 million, a 17.7% year-over-year increase. Its earnings per share of $0.45 slightly exceeded analyst consensus. Looking ahead, management provided fourth-quarter revenue guidance of at least $840 million, surpassing expectations and implying growth of approximately 13.4%.

While this forecast alleviates fears of a more severe slowdown, it raises a fundamental question for investors: is growth in the 13% to 18% range sufficient to justify a higher valuation, especially when compared to the significantly stronger expansion rates posted in prior years? In a separate confidence signal, the company's board authorized a new $500 million share repurchase program, indicating management's belief that the stock is undervalued.

Institutional Steadiness and Technical Pressure

The shareholder base reveals a noteworthy dynamic. Institutional investors continue to hold a dominant stake in the company. There are no clear signs of a mass exodus by major asset managers despite the steep price depreciation. The rating upgrade from a former skeptic could reinforce the view among these holders that a sustainable bottom is forming.

From a technical analysis perspective, conditions remain challenging. The share price continues to trade well below its 200-day moving average, confirming the prevailing downtrend. However, trading volume on Monday exceeded ten million shares, indicating heightened activity and suggesting market participants are actively assessing potential entry points.

The Next Catalyst: February's Earnings Report

The next major directional catalyst is scheduled for mid-February 2026, when the company releases its quarterly earnings. Should The Trade Desk meet or exceed its own projections, the debate over its valuation is likely to reignite. Conversely, disappointing results would cement the narrative of slowing growth and could trigger renewed selling pressure. Until then, the stock is likely to remain a battleground between value-oriented buyers attracted by the depressed price and growth investors wary of the moderated expansion pace.