Why the Trade Desk Stock Collapsed 68% In 2025

2025 was a rough year for investors in The Trade Desk (NASDAQ: TTD). The technology platform for advertisers looking to escape the walled gardens fell 67.7%, according to data from S&P Global Market Intelligence. Slowing revenue growth amid a changing landscape in digital advertising on television, along with the adoption of artificial intelligence (AI), has led investors to bail on the stock.

Here's why the stock fell last year, and whether it is a buy today.

Increasing competition in TV

For the first nine months of 2025 (Q4 numbers are not yet available), The Trade Desk generated 20% revenue growth, which appears to be a solid figure in isolation. However, this was a slowdown in growth from 2024, when the company posted 27% revenue growth over the same period.

Revenue growth deceleration is typically going to cause a stock to fall, which happened to The Trade Desk throughout 2025. Investors are worried about two factors influencing The Trade Desk's position in the digital advertising market, specifically in the lucrative streaming TV space. First, there is the rise of Amazon as a direct competitor in TV advertising. Amazon now has its own demand-side platform (DSP) to serve advertisers, which is the entire Trade Desk business model. It recently signed on with Netflix for inventory, giving advertisers a wide breadth of inventory when using the Amazon Ads business.

Another potential threat is AI. The Trade Desk is competing with the likes of Google and Instagram to win advertising spend. If AI can help improve advertising targeting on these services, it is less likely that customers will switch to The Trade Desk if they can get a better return on advertising spend somewhere else.

These two concerns are why The Trade Desk's stock fell in 2025.

Image source: Getty Images.

Time to buy the dip on The Trade Desk?

After the stock's collapse, The Trade Desk now has a market cap of $18 billion. It generated net income of $439 million over the last twelve months for a trailing price-to-earnings ratio (P/E) of 43. This is one of the cheapest P/E ratios that The Trade Desk has ever traded at, but it is still a premium earnings ratio compared to the broad market.

Even though The Trade Desk is still growing in the double-digits, investors should be concerned with the success of Amazon's advertising technology and how AI could disrupt this entire market. The Trade Desk is a small minnow competing with the sharks in Alphabet, Meta Platforms, and Amazon.

With the P/E ratio still above 40, it is best to avoid buying The Trade Desk stock right now.

Brett Schafer has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet, Amazon, Meta Platforms, Netflix, and The Trade Desk. The Motley Fool has a disclosure policy.