The Trade Desk (TTD) Announces a 10-for-1 Stock Split, Stock Crashes 20% Despite a Profit and Sales Beat, But Revenue Growth Marks a 'Notable Deceleration' Says Analyst

May 10, 2021 10:22 AM EDT
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Price: $60.88 -2.03%

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Shares of The Trade Desk (NASDAQ: TTD) fell sharply Monday after the company reported Q1 results in pre-market trading.

Earnings per share soared 182% to $1.41 per share, which is nearly double the estimate of $0.77 per share. Revenue grew 36.8% to $219.81 million, again higher compared to the consensus of $216.9 million.

“We delivered outstanding performance in the first quarter, once again surpassing our expectations. Revenue growth acceleration over Q1 a year ago is testament to the value that marketers are placing on data-driven advertising. Nowhere is this more apparent than CTV, which continues to lead our growth,” said Jeff Green, co-founder and CEO of The Trade Desk.

As for the guidance, TTD expects Q2 sales between $259 million and $262 million, while adjusted EBITDA is expected of at least $84 million, both higher than the analysts’ estimates.

“Our business has been impacted by the COVID-19 pandemic that has significantly impacted advertiser demand. Like many companies that are ad-funded, we are facing a period of higher uncertainty in our business outlook. We expect our business performance could be impacted by issues beyond our control, such as changing economic conditions or additional shelter-in-place orders that may or may not occur,” the company’s statement reads.

In a separate press release, TTD announced a ten-for-one split of its common stock in the form of a stock dividend. Therefore, each shareholder will receive nine additional shares to be distributed after close of trading on June 16.

“The Trade Desk has consistently delivered strong top line growth and GAAP profitability as a publicly traded company. In that time, we have emerged as the default demand side advertising platform for the open internet, and we continue to invest to build on that leadership position,” said Jeff Green, Co-Founder and CEO of The Trade Desk.

“As a result, our share price has increased about 2,100% since our initial public offering in September of 2016. We are confident in our future growth prospects and our goal with this split is to make The Trade Desk stock more accessible to our employees and a broader base of investors.”

TTD stock trades 20% lower in Monday trading amid decelerating growth compared to Q4.

Stifel analyst John Egbert notes that “revenue growth marked a notable deceleration from 4Q's growth despite easing y/y comps in March,” hence shares trading lower.

“The outlook implies sequential growth of approximately +18% q/q at the midpoint vs. typical growth of +30% q/q during 2Q in most prior years (excluding FY:20 due to COVID-19 impact),” Egbert wrote in a note sent to clients.

The analyst added that he is awaiting more info from the company, “particularly the company's outlook on growth by channel and the potential impact of recent privacy developments,” before potentially adjusting its rating and price target.

Egbert rates TTD as “Hold” with a price target of $700.00 per share.

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