What’s Happening With The Trade Desk Stock?

The Trade Desk (NASDAQ:TTD) stock has experienced a significant 40% dip in 2025, largely attributed to internal restructuring efforts that impacted near-term performance and the slower-than-anticipated adoption of its AI platform, Kokai. This decline prompts the crucial question: Is TTD a buy after this recent setback? We believe it is.

At its current price of around $70, TTD stock appears attractive. Our confidence is rooted in a comprehensive analysis that compares its current valuation with its historical operating performance and financial health. We have assessed The Trade Desk across key parameters, including its growth trajectory, consistent profitability, robust financial stability, and demonstrated resilience during economic downturns. This detailed examination of TTD’s operational strength and financial condition leads us to conclude there’s minimal cause for long-term concern with the stock. That said, if you seek upside with lower volatility than individual stocks, the Trefis High Quality portfolio presents an alternative — having outperformed the S&P 500 and generated returns exceeding 91% since its inception. Separately, see – BigBear.ai: What’s Happening With BBAI Stock?

Image by AS Photograpy from Pixabay

How Does The Trade Desk’s Valuation Look vs. The S&P 500?

Going by what you pay per dollar of sales or profit, TTD stock looks very expensive compared to the broader market.

• The Trade Desk has a price-to-sales (P/S) ratio of 13.4 vs. a figure of 3.1 for the S&P 500
• Additionally, the company’s price-to-free cash flow (P/FCF) ratio is 50.3 compared to 20.9 for S&P 500
• And, it has a price-to-earnings (P/E) ratio of 83.8 vs. the benchmark’s 26.9

How Have The Trade Desk’s Revenues Grown Over Recent Years?

The Trade Desk’s Revenues have grown considerably over recent years.

• The Trade Desk has seen its top line grow at an average rate of 25.8% over the last 3 years (vs. increase of 5.5% for S&P 500)
• Its revenues have grown 25.1% from $2.1 Bil to $2.6 Bil in the last 12 months (vs. growth of 5.5% for S&P 500)
• Also, its quarterly revenues grew 25.4% to $616 Mil in the most recent quarter from $491 Mil a year ago (vs. 4.8% improvement for S&P 500)

How Profitable Is The Trade Desk?

The Trade Desk’s profit margins are around the median level for companies in the Trefis coverage universe.

• The Trade Desk’s Operating Income over the last four quarters was $453 Mil, which represents a moderate Operating Margin of 17.6%
• The Trade Desk’s Operating Cash Flow (OCF) over this period was $845 Mil, pointing to a high OCF Margin of 32.9% (vs. 14.9% for S&P 500)
• For the last four-quarter period, The Trade Desk’s Net Income was $412 Mil — indicating a strong Net Income Margin of 16.0% (vs. 11.6% for S&P 500)

Does The Trade Desk Look Financially Stable?

The Trade Desk’s balance sheet looks very strong.

• The Trade Desk’s Debt figure was $335 Mil at the end of the most recent quarter, while its market capitalization is $35 Bil (as of 6/25/2025). This implies a very strong Debt-to-Equity Ratio of 1.0% (vs. 19.4% for S&P 500). [Note: A low Debt-to-Equity Ratio is desirable]
• Cash (including cash equivalents) makes up $1.7 Bil of the $5.7 Bil in Total Assets for The Trade Desk.  This yields a very strong Cash-to-Assets Ratio of 30.5%

How Resilient Is TTD Stock During A Downturn?

TTD stock has fared worse than the benchmark S&P 500 index during some of the recent downturns. While investors have their fingers crossed for a soft landing by the U.S. economy, how bad can things get if there is another recession? Our dashboard How Low Can Stocks Go During A Market Crash captures how key stocks fared during and after the last six market crashes.

Inflation Shock (2022)

• TTD stock fell 64.3% from a high of $111.64 on 16 November 2021 to $39.89 on 9 November 2022, vs. a peak-to-trough decline of 25.4% for the S&P 500
• The stock fully recovered to its pre-Crisis peak by 4 October 2024
• Since then, the stock has increased to a high of $139.51 on 4 December 2024 and currently trades at around $70

COVID-19 Pandemic (2020)

• TTD stock fell 54.2% from a high of $31.54 on 19 February 2020 to $14.44 on 18 March 2020, vs. a peak-to-trough decline of 33.9% for the S&P 500
• The stock fully recovered to its pre-Crisis peak by 7 May 2020

Putting All The Pieces Together: What It Means For TTD Stock

In summary, The Trade Desk’s performance across the parameters detailed above are as follows:

• Growth: Extremely Strong
• Profitability: Neutral
• Financial Stability: Extremely Strong
• Downturn Resilience: Very Weak
• Overall: Very Strong

The Trade Desk stock demonstrates strong performance across the parameters we’ve analyzed. While its valuation appears expensive when compared to the S&P 500 index, it’s currently trading below its own three-year historical average price-to-sales (P/S) ratio of 19x. For context, its closest peer, AppLovin (APP), trades at a P/S ratio of approximately 25x based on trailing revenues. See – AppLovin Stock: Worth It At $365? Furthermore, the average analyst price target of $86 for TTD suggests a substantial upside potential of over 25% from its current level.

Not too happy about the volatile nature of TTD stock? The Trefis High Quality (HQ) Portfolio, with a collection of 30 stocks, has a track record of comfortably outperforming the S&P 500 over the last 4-year period. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride, as evident in HQ Portfolio performance metrics.

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