Is The Trade Desk Stock Overvalued?
Advertising technology company The Trade Desk (NASDAQ: TTD) reported some terrific first-quarter results on Wednesday afternoon. Even more, the company provided guidance for more strong double-digit growth in Q2. Yet shares of the growth stock fell on Thursday, even as the tech-heavy ticked higher. This begs the question: Is the stock simply overvalued? Perhaps the stock's 43% year-to-date gain has simply already priced in strong underlying business growth in the years to come and the ad tech specialist will need to deliver near-flawless execution to live up to its valuation.
A close look at The Trade Desk's business and its stock's valuation, however, reveals that shares probably deserve the premium valuation they are trading at. Not only is the company's programmatic digital ad-buying platform gaining market share today but there's good reason to believe that The Trade Desk has a long runway for further market share gains in the year to come.
The uncertain macroeconomic environment that is limiting many marketers' budgets doesn't seem to be weighing heavily on The Trade Desk. The company's first-quarter revenue increased 21% year over year to $383 million. This blew past analysts' consensus forecast for first-quarter revenue of about $365 million. Even more, the ad tech company guided for second-quarter revenue of "at least" $452 million, implying 20% year-over-year growth or greater.
Source Fool.com
