The Trade Desk Is Down 40% This Year. Here's Why I'm Not Buying (Yet).

Shares of The Trade Desk (NASDAQ: TTD) had a horrible 2025, falling about 68%. And 2026 has added to the pain, with the stock falling more than 40% year to date as of this writing. Many investors have abandoned the stock as they process a string of negative headlines.

Is the stock's steep pullback a rare buying opportunity? Or does the recent flurry of red flags mean investors should stay on the sidelines?

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Slowing growth

The digital ad-buying company's most recent quarterly update showed a business that is still growing, but at a slower rate. The Trade Desk's fourth-quarter revenue rose 14% year over year to $846.8 million. This is down from 22% growth in the year-ago quarter and 18% growth in the third quarter of 2025.

Though management emphasized in the company's earnings call that, when you exclude political advertising spend from the comparison, The Trade Desk actually grew fourth-quarter revenue 19% year over year.

Even so, the company's guidance is disappointing. Management guided for revenue of at least $678 million. This implies year-over-year growth of just 10%.

This clear deceleration in the company's top line is concerning -- and far from the growth rates the company typically achieves.

Turnover and disputes

And growth isn't The Trade Desk's only challenge. The company is navigating significant turbulence in its C-suite and with its key partners.

Earlier this year, The Trade Desk announced the sudden departure of its chief financial officer, Alex Kayyal, who had taken the job just five months prior in August 2025. The company appointed Tahnil Davis as interim CFO while it searches for a permanent successor. Making the rapid executive shuffle even more notable, Kayyal also stepped down from the company's board of directors last month. Given how closely this follows the departure of the company's prior longtime CFO, this high turnover in such a key position could be a red flag.

But perhaps the most alarming development is the company's recent friction with some of the world's largest advertising agencies.

Last month, Publicis Groupe reportedly told its clients to avoid using The Trade Desk's platform, citing transparency concerns regarding fees.

WPP and Dentsu have also reportedly distanced themselves from the platform -- particularly from The Trade Desk's OpenPath product.

The Trade Desk founder and CEO Jeff Green, however, has vigorously disputed criticisms against the company recently.

Still, a very public dispute with three of the advertising industry's biggest names only adds to an already heavy cloud of uncertainty.

Is the stock a buy?

With a struggling growth narrative, a sudden executive transition, and an open feud with major ad agencies, the bull case for The Trade Desk is getting harder to defend.

But what about the stock's valuation? After falling so sharply this year, are shares finally cheap enough to make the growth stock a buy?

I don't think so.

As of this writing, The Trade Desk trades at a price-to-earnings ratio of about 25. While this is certainly cheaper than the multiples the stock commanded last year, a valuation like this still requires consistent execution and robust earnings growth for years to come. In fact, I'd argue that a valuation like this already prices in a revenue growth reacceleration. Yet management only guided for revenue growth of at least 10% in Q1.

The stock's valuation simply doesn't leave much room for a lull in the company's growth story or for an extended disruption in its agency relationships, giving investors a risky setup.

For now, I plan to be patient and keep The Trade Desk on my watchlist.

With all of this said, I do believe The Trade Desk is a great company. Don't mistake a judgment against the stock as one against the company. At a certain price, I would buy in.

What price? A meaningfully lower one for sure.

As an investor, I demand a margin of safety before I buy. We're close. But we're not there yet.

Of course, there's no guarantee the stock will fall further. But I don't mind waiting patiently and allocating my capital elsewhere in the meantime.

Daniel Sparks and his clients have 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.