The Trade Desk Has Fallen 76% This Year: Here's What Investors Should Know

The Trade Desk (NASDAQ: TTD), one of the world's largest independent adtech companies, was once a hot growth stock. However, it's declined 76% year to date as investors fretted over its cooling growth, competitive threats, a management shake-up, and a highly publicized dispute with Publicis (OTC: PUBGY), one of the world's largest advertising groups. Concerns about inflation, elevated interest rates, and other macro headwinds also squeezed its valuations.

Does The Trade Desk's pullback represent a good buying opportunity for contrarian investors? Or does it face existential threats that will derail its long-term growth?

Image source: Getty Images.

What happened to The Trade Desk?

The Trade Desk operates a demand-side platform (DSP) for digital ads. It sells advertising space for automated ads across desktop, mobile, and connected TV (CTV) platforms. DSPs work with the sell-side platforms (SSPs) that help publishers sell their ad inventory.

Digital advertising giants -- such as Meta Platforms and Alphabet's Google -- often bundle together DSPs, SSPs, and other adtech services in their platforms. However, companies that want to deliver ads beyond those "walled gardens" often turn to independent DSPs like The Trade Desk.

From 2020 to 2025, The Trade Desk's revenue and adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) grew at CAGRs of 28% and 33%, respectively. Most of that growth was fueled by its CTV business, which benefited from the rise of ad-supported streaming media services, instead of its slower-growing desktop and mobile platforms.

But from 2025 to 2028, analysts expect its revenue and adjusted EBITDA to grow at CAGRs of 9% and 7%, respectively. Automakers and consumer packaged goods makers, which usually account for more than a quarter of its revenue, are reining in ad spending amid macro headwinds.

Its higher-growth CTV business also faces intense competition from Amazon (NASDAQ: AMZN), which launched its own DSP to challenge independent DSPs like The Trade Desk. Other advertisers are looking for ways to completely bypass middleman platforms like DSPs and SSPs.

As it grapples with these challenges, it's still dealing with the fallout from its dispute with Publicis, which advised all of its clients to stop using The Trade Desk amid accusations of "stacked fees" and unauthorized charges, as well as two CFO departures in less than two months.

Is The Trade Desk a contrarian play?

With an enterprise value of $7.36 billion, The Trade Desk looks historically cheap at six times this year's adjusted EBITDA. But its stock won't command a higher valuation unless it resolves its most pressing issues. So while The Trade Desk isn't down for the count yet, I wouldn't consider it a contrarian play unless it shows clearer signs of a potential turnaround.

Leo Sun has positions in Amazon and Meta Platforms. The Motley Fool has positions in and recommends Alphabet, Amazon, Meta Platforms, and The Trade Desk. The Motley Fool has a disclosure policy.