The Trade Desk Faces Mounting Pressure from Amazon’s Ad-Tech Expansion

The Trade Desk US88339J1051

Shares of advertising technology firm The Trade Desk have endured a punishing year on the stock market, shedding more than 72 percent of their value since January. This dramatic decline reflects a mass exodus of investors from the former advertising sector high-flier, driven by a formidable competitor capturing market share. Despite the company posting solid operational results, a critical question looms: can this ad-tech specialist withstand the aggressive offensive launched by Amazon?

The prevailing market uncertainty is clearly visible in the actions of major investors. Thrivent Financial, for instance, slashed its stake by over 31 percent last quarter, part of a broader trend of risk reduction among institutional players. While hedge funds continue to hold nearly 68 percent of shares, and some are using the depressed price as a buying opportunity, overall sentiment remains damaged.

The technical chart picture confirms this skepticism. Trading at a current price of €31.76, the stock is hovering just above its 52-week low of €30.80. Key technical indicators, like the 200-day moving average near €50, are far out of reach. The vast distance from the yearly high of over €121 underscores the scale of the confidence that has been lost.

Amazon's Foray into Streaming Advertising Intensifies Competition

The primary catalyst for the severe price drop is heightened competition from Amazon. The e-commerce giant has significantly expanded its own advertising platform, taking direct aim at The Trade Desk's core connected TV (CTV) business.

A particularly critical development for The Trade Desk is Amazon's strategic partnership with Netflix. This alliance grants the Amazon platform direct access to premium streaming advertising inventory that was previously considered The Trade Desk's domain. Similar agreements with Disney and Roku further solidify Amazon's position, placing immense pressure on the independent provider's business model.

Fundamentals and AI Platform Offer Glimmers of Hope

Despite the share price disaster, the underlying fundamental data is far from catastrophic. The company exceeded earnings expectations in the third quarter and grew revenue by nearly 18 percent. A $500 million share repurchase program, coupled with a debt-free balance sheet holding $1.4 billion in cash, points to underlying financial stability.

A beacon of hope is the new AI-powered platform, "Kokai." This system is already employed as the standard by 85 percent of clients and is delivering measurably better results for advertising campaigns. Although analysts have broadly lowered their price targets—Morgan Stanley downgraded the stock—the average target price remains significantly above the current trading level. For a sustainable recovery to take hold, The Trade Desk must demonstrate over the coming quarters that it can maintain profitable growth in the face of Amazon's intensified competition.