Why The Trade Desk Stock Slipped This Week
Key Points
A large advertising agency alleged that The Trade Desk overcharged for services.
The fallout from these allegations could severely damage The Trade Desk's revenue growth in 2026.
Shares of the stock still don't look cheap today.
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Shares of The Trade Desk (NASDAQ: TTD) slipped 12.6% this week, according to data from S&P Global Market Intelligence. The advertising technology platform was publicly accused by one of its largest clients of overcharging for services, which is leading to uncertainty on Wall Street.
The stock had been recovering after the founder's insider buys, but is now back near recent lows and down 83% from its recent highs set at the end of 2024. Here's why the stock was falling this week, and whether now would be a good time to buy the dip on The Trade Desk.
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Overcharging for advertising services
Publicis Groupe is one of the largest advertising agencies in the world. Brands go to them to buy advertising services, and Publicis will use platforms such as The Trade Desk as a digital advertising tool to get ads in front of the right eyeballs across the internet, connected TV, and audio streaming platforms.
This week, Publicis came forward and said it conducted an audit of The Trade Desk's services, finding that it overcharged them and added them to premium features with their consent. As one of the largest spenders on the Trade Desk's advertising platform, this could severely hurt revenue growth in 2026, especially if other agencies shy away from using it as well.
Image source: Getty Images.
Time to buy the dip?
Even before this potential scandal, The Trade Desk was facing woes in its advertising business. Revenue growth had decelerated to 14% in Q4 of last year, down from 22% in the same quarter a year prior. Now, if Publicis leaves the Trade Desk, it may see a revenue decline this year.
After this drawdown, The Trade Desk has a price-to-earnings ratio (P/E) of 26.4. This may look cheap compared to its historical valuation, but it is not dirt cheap for a business facing a potential collapse in sales. Avoid buying the dip on the Trade Desk stock right now.
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Brett Schafer has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends The Trade Desk. The Motley Fool has a disclosure policy.
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