The Trade Desk Just Waved a Red Flag, and It's not the Quarterly Results

The Trade Desk (NASDAQ: TTD) was a market darling for much of its history, but since peaking in late 2024, the adtech stock has been an absolute disaster.

The stock has crashed 84% since its top less than a year-and-a-half ago, as the company's competitive advantages in adtech seem to have significantly eroded.

As you can see from the chart below, revenue growth has rapidly decelerated over the last four quarters after the company had reported at least 20% growth in every quarter except the one at the start of the pandemic.

TTD data by YCharts

After a first-quarter report in which its revenue growth rate declined to 12%, the sell-off in the stock seems fair, and its prospects for a turnaround seem to be getting worse as well.

Not only did revenue growth slow to just 12% in the quarter, but profits fell as well with adjusted earnings per share declining from $0.33 to $0.28, missing estimates at $0.32. The Trade Desk's guidance for the second quarter was much worse than expectations, calling for revenue growth of just 8% to $750 million, below the consensus at the time of $770 million.

The company's evaporating growth rate is alarming, but there's something even more concerning, and it's why I'm considering selling my shares, despite the deep discount they're now trading at.

Image source: Getty Images.

Time to get real

CEOs are natural salesmen and almost always strike an optimistic tone during quarterly reports. However, a stock crash of more than 80% and a decline in revenue growth of well over 20% to just 8% warrants a reckoning. Instead, The Trade Desk CEO Jeff Green seems unwilling or unable to do so, ignoring over a year's worth of disastrous results.

When the stock crashed in February 2025, kicking off the recent slide, Green dismissed it as a one-off event, blaming it on unforced errors, rather than factors like competition, changing market dynamics, or new technology like AI. In the first-quarter earnings report, Green called the period "another strong quarter for The Trade Desk," though he acknowledged headwinds in the macro environment.

I'm not sure what headwinds he has been referring to, but the digital ad market has been booming. Meta Platforms just reported 33% revenue growth in its first quarter, and Alphabet grew its search advertising business by nearly 20%. Amazon, the other major "walled garden," reported ad growth of 24%, and that company has also aggressively expanded its own DSP, taking share from The Trade Desk.

The Trade Desk competes directly with these companies, and it's clearly losing out on customer ad dollars. Even worse, in March, Publicis Group, one of the largest ad agencies in the world, recommended that its clients stop using The Trade Desk after an audit showed that the adtech platform was billing for unauthorized fees and services. On the earnings call, Green said that the conflict with Publicis had been overdramatized, and that negotiations were ongoing.

Additionally, the company has lost two CFOs in less than six months and now has an interim CFO, while it searches for a replacement. When a struggling business can't hold on to its CFO, that's typically a warning sign.

What's next for The Trade Desk

If there's a silver lining here, it's that The Trade Desk stock has gotten cheap enough to make it worth sticking around if it can muster a comeback, trading at a forward price-to-earnings ratio of just 12, based on adjusted earnings.

However, Green's lack of accountability does not inspire confidence. I'm willing to give the business a couple more quarters to see if it stabilizes. If growth continues to slow, I think it's safe to say that The Trade Desk's best days are behind it, and it's time to move on.

Jeremy Bowman has positions in The Trade Desk. The Motley Fool has positions in and recommends The Trade Desk. The Motley Fool has a disclosure policy.