The Trade Desk, Inc. (TTD): A Bull Case Theory

We came across a bullish thesis on The Trade Desk, Inc. (TTD) on Substack by Francesco Ferrari. In this article, we will summarize the bulls’ thesis on TTD. The Trade Desk, Inc. (TTD)’s share was trading at $59.34 as of March 24^th. TTD’s trailing and forward P/E were 76.08 and 53.48 respectively according to Yahoo Finance.

The Trade Desk (TTD) has experienced a sharp decline, shedding 53% of its value in just over a month. However, despite this dramatic drop, the stock remains a long-term market-beating investment, delivering a 24.4% CAGR over the past five years. As a leading cloud-based ad-tech platform, TTD connects advertisers with ad-inventory suppliers across streaming, TV, mobile, and out-of-home displays. Its role as the dominant Demand-Side Platform (DSP) allows it to drive high returns on ad spend, charging a software fee in exchange for programmatic advertising efficiency. Financially, the company remains strong, boasting forward revenue growth of 17-18%, a free cash flow margin of 24.2%, and a return on invested capital of 25.4% in its latest quarter.

The recent selloff stems from TTD’s premium valuation, which left no room for missteps. The stock had been priced for perfection, consistently exceeding estimates and raising guidance, making the downturn almost inevitable once sentiment shifted. Looking ahead, the risk-reward balance appears stable, with downside protection but a moderate upside. While a reversion to historical valuation multiples could lead to a potential doubling of the stock, the competitive landscape—especially with major players like Meta, Google, and Amazon dominating digital ad space—warrants caution. TTD remains a high-quality, founder-led compounder, but its current valuation does not yet present an asymmetric opportunity. A small position may be justified for those with no better alternatives, but patience could offer a more compelling entry point.

The Trade Desk, Inc. (TTD) is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 63 hedge fund portfolios held TTD at the end of the fourth quarter which was 42 in the previous quarter. While we acknowledge the risk and potential of TTD as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than TTD but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

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Disclosure: None. This article was originally published at Insider Monkey.