Why The Trade Desk Stock Plunged to a New 5-Year Low Today
Key Points
A Wall Street analyst slashed his price target on The Trade Desk.
This comes on the heels of executive departures, slowing growth, and rising competition.
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Shares of The Trade Desk (NASDAQ: TTD) slumped anew on Tuesday, falling as much as 10.7%. As of 3:13 p.m. ET, the stock was still down 9.6%.
The catalyst that sent the adtech specialist swooning was (another) price target cut courtesy of a Wall Street analyst.
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Dimming prospects?
KeyBanc analyst Justin Patterson lowered his price target on The Trade Desk to $40, down from $88, while maintaining an overweight (buy) rating on the stock. For those keeping track at home, that still represents potential upside of 35% compared to Monday's closing price -- though investors chose to see the glass as half empty.
The analyst cited a challenging environment for small and medium-sized adtech businesses, as larger players increasingly deploy artificial intelligence (AI) to reach their target markets.
This comes on the heels of an announcement last week that CFO Alex Kayyal was terminated after just five months on the job. That marked the second CFO departure in less than a year.
These are just the latest in a series of developments that have soured some investors on The Trade Desk.
Early last year, the company unceremoniously missed its own guidance for the first time as a public company, breaking a streak that stretched back 33 quarters. CEO Jeff Green admitted there had been "a series of small execution missteps," suggesting The Trade Desk would soon return to form. However, its growth has slowed in each quarter since.
Beyond that, the company has faced slowing growth and increasing competition. This culmination of factors leaves investors wondering if The Trade Desk's best days have passed.
Indeed, the stock has now fallen more than 78% over the past year, with no sign of recovery in sight. I'm a big fan of The Trade Desk, but I suggest that investors watch for signs of a mounting turnaround before buying the dip.
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Danny Vena, CPA has positions in The Trade Desk. The Motley Fool has positions in and recommends The Trade Desk. The Motley Fool has a disclosure policy.
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