There’s certainly a chance to profit if a rebound occurs! The Trade Desk has taken a hit in 2025, dropping nearly 60% and currently trading at just $50 — a support level that has sparked notable rallies in every year over the past five years, except 2024. But beneath the surface panic lies a powerhouse. TTD stands out as the only major pure-play in programmatic advertising, while big players like Google, Amazon, and Meta manage their DSPs (demand-side platforms) as secondary ventures. Revenue still climbed 22% last quarter, and with annual growth exceeding 25% and rising operating margins — this isn’t a company in decline. Once the dust settles, $50 could look like a solid entry point.
Still, investing in individual stocks carries significant risk. If you’re looking to mitigate that while still benefiting from the upside, consider the High-Quality portfolio, which has outpaced the S&P 500 and delivered returns of over 91% since its inception.
Focused Growth Machine
- Over 25% revenue growth in the past 12 months and consistently for the last 3 years
- Operating margin increased to 17.5% over the last 12 months, compared to a 3-year average of 11.7%; TTD’s cloud-native infrastructure supports further margin expansion with scale
- Strong cash generation at current growth levels — free cash flow margin stands at 26%
- Minimal debt reduces exposure to leverage risks
- A pure-play business solely focused on programmatic advertising; other niche competitors are much smaller with market caps under $2 billion compared to TTD’s $27 billion
But Here Is The Risk
Even after the decline, TTD’s P/EBIT and P/E ratios remain elevated at 63 and 69, respectively. While high valuations can endure, they typically compress over time — making it crucial to assess valuation alongside growth. Multiples are bound to decline in the coming years. The key question is whether growth in revenue and margin expansion can drive enough profit growth to offset the impact of lower multiples and still grow the market cap.
A rough estimate shows that if TTD maintains a 20% annual growth rate over the next three years and lifts operating margins from 17.5% to 25%, operating income could surpass $1 billion. Even if valuation multiples were halved — which is a conservative assumption given its potential — the stock could still deliver superior returns compared to risk-free assets.
Balancing valuation with growth is one of the key strategies we apply in the Trefis High Quality Portfolio — a set of 30 stocks that has consistently outperformed the S&P 500 over the past 4 years. Why? Collectively, these stocks have delivered better returns with lower volatility versus the index — offering a smoother investment experience, as shown in the HQ Portfolio performance metrics.
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