Trade Desk falls on weak outlook, Loop downgrades on ad recovery uncertainity

Investing.com -- The Trade Desk (NASDAQ: TTD) drew a downgrade from Loop Capital after issuing a first quarter revenue forecast that missed expectations, raising fresh concerns about near term advertising demand. The shares fell about 16% in after hours trading, returning to pre COVID levels.

The digital advertising platform forecast first quarter 2026 revenue of $678 million, below estimates of $688.4 million. The company reported adjusted earnings per share of $0.59 for the fourth quarter, above expectations of $0.34, while revenue rose to $847 million, ahead of consensus.

Loop described the results as a beat and lower quarter. It said the outlook for about 10% revenue growth in the first quarter, along with roughly 500 basis points of year over year margin compression, was worse than expected.

Management attributed the slowdown to macro pressure, particularly among consumer packaged goods and auto advertisers, which together account for more than a quarter of bookings. The company said growth would have been at least 5 percentage points higher without weakness in those categories.

Loop downgraded the stock to Hold from Buy, saying it can no longer recommend new money until there is clearer visibility into a normalization in growth. The firm set a $25 price target, based on 10 times its 2027 non GAAP earnings estimate.

Loop said it believes the stock is oversold and that the issues appear more macro driven than competitive. However, it warned that the path to restoring investor confidence could be prolonged, especially after the company disclosed 2025 gross bookings growth of 11%, below what many investors had assumed.

Chief Executive Jeff Green said advertisers are prioritizing measurable outcomes and data-driven decisions over low-cost reach, positioning the company as an independent platform in the advertising supply chain. He pointed to product updates across Kokai, retail data partnerships and supply chain tools as areas of focus heading into 2026.

The Trade Desk operates a demand-side platform that allows advertisers to buy digital ad inventory across channels including connected TV, mobile and online video. Investors have been closely watching whether ad spending remains resilient as brands balance marketing budgets against broader economic uncertainty.

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