Why I'm Still Not Buying The Trade Desk Stock After a 90% Drop

The Trade Desk (NASDAQ:TTD) is getting smaller. Earlier this month, the advertising technology company said it will cut about 15% of its workforce, a reduction it expects to substantially complete this quarter.

The announcement came about a month after management guided for third-quarter revenue of at least $650 million -- down about 12% from the $739 million the company generated in the same quarter last year.

The stock, meanwhile, trades around $14 as of this writing, about 90% below the record it set in December 2024. The slide runs deep enough that Monday's quarterly index rebalance moves the stock out of the S&P 500 and down to the S&P SmallCap 600. A decline that steep can pull in bargain hunters, and I understand the temptation. After all, the company holds about $1.5 billion in cash and short-term investments, and its customers keep renewing.

But I'm still not buying. Here's a closer look at why the price alone doesn't make the case, and what would.

Image source: The Motley Fool.

The forecast keeps stepping down

The forecast is the part I keep coming back to. As recently as the third quarter of 2025, The Trade Desk grew revenue 18% year over year to $739 million. Growth slowed to 14% in the fourth quarter of 2025 and to 12% in the first quarter of 2026. In the second quarter, revenue rose just 3% year over year to $715 million. And the current guidance calls for a decline of about 12% -- each step lower than the one before it.

Profits are decelerating even faster. Management guided for about $160 million of non-GAAP (adjusted) earnings before interest, taxes, depreciation, and amortization (EBITDA) in the third quarter, down from $317 million a year earlier.

And second-quarter net income fell about 29% year over year to $64 million.

Management isn't promising a quick fix, either. Chief financial officer Nate Olmstead said on the company's second-quarter earnings call in August that "visibility is somewhat more limited than it has been in recent history," and the guidance assumes no meaningful improvement in the advertising environment.

Cost cuts don't fix demand

The September layoffs address the profit side of that picture. The Trade Desk expects $39 million to $51 million in cash charges for severance and related costs, and a leaner cost structure should help margins while revenue falls.

What the cuts can't do is bring back ad spending.

CEO Jeff Green said on the same call that consumer packaged goods and auto advertisers (about 25% of The Trade Desk's business) have been hurt by tariffs and oil prices, and that the company's own execution fell short.

Competition adds pressure from the other side. The Trade Desk remains the largest independent demand-side platform (the software advertisers use to buy ads across the internet in an automated way). But big advertisers have reportedly been spreading more of their budgets across rival platforms, including the one Amazon runs.

Cheap against what?

On the numbers already in the books, the stock looks inexpensive.

At around $14, The Trade Desk carries a market capitalization of about $6.6 billion: a little more than 2 times its trailing-12-month sales, for a company that was growing 18% a year ago. Back out the cash, and the market values the business itself at a little over $5 billion. The company also generated $419 million of free cash flow in the first half of 2026.

However, all of those figures describe what the business has already done, not what it's guiding toward. Guidance calls for shrinking revenue and for adjusted EBITDA to fall roughly in half, and free cash flow will likely follow profits lower. In other words, the stock is more expensive than it looks.

Notably, customer retention stayed above 95% in the second quarter, as it has for more than a decade. Customers aren't leaving the platform. They're spending more carefully on it. That retention record is arguably the strongest thing the company has going for it.

What would a turnaround have to show?

I'd want revenue guidance that points up instead of down, evidence that the pressure on consumer packaged goods and auto advertisers is easing, and margins that hold because demand recovered -- not just because the workforce got smaller.

Ultimately, The Trade Desk has the cash and the customer base to work with, and the business could stabilize from here. But a stock that has fallen about 90% isn't automatically a bargain, just a lower price on a business whose own forecast is still shrinking.

I'm not buying at about $14. And until the forecast turns, I'd rather watch from the sidelines.

Daniel Sparks and his clients do not have positions in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon and The Trade Desk. The Motley Fool has a disclosure policy.