Should You Trim Or Add To Your Trade Desk Position Now?
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Trade Desk (TTD) stock costs 22.0 times its earnings, almost exactly the S&P 500’s 21.9. The shares lost 65% over the past twelve months while the index returned 12.2%, so if you hold them, the question is whether a market-level valuation after a fall that deep is a chance to add or a reason to trim. The harder part is that Trade Desk’s revenue in fiscal Q3 2026 came in 0.5% below a year earlier. So what profit are you paying for at 22 times earnings?
What Profit Are You Paying For At Trade Desk?
You are paying for $329 million of net income over the twelve months to September 30, 2026, down from $439 million a year earlier. More than half of that profit, $187 million, came in a single quarter, the three months to December 31, 2025. Each of the three quarters since then earned far less, and the best of them brought in $64.4 million. The third quarter’s profit was also held down by a one-time cost for the job cuts. That strong quarter leaves the twelve-month figure once Trade Desk reports its fourth quarter, and unless the new quarter earns as much, twelve-month profit will fall and the earnings multiple will rise at today’s price.
Trade Desk Keeps Less Of Each Sales Dollar
Trade Desk kept 12.6% of its fiscal Q3 2026 sales as operating profit, down from 21.8% in the same quarter a year earlier. Its operating margin over the past twelve months was 17.3%. That figure sits below the S&P 500’s 19.0%, so the business now earns less on each dollar of sales than the index as a whole.
Costs climbed while sales stood still. Platform operations expense, the cost of running its platform including data centers and hosting, rose 23% from a year earlier in the third quarter. Trade Desk also took $44 million of restructuring charges in the quarter, consisting mostly of severance tied to the job cuts announced in September.
What Could Change Trade Desk’s Profit In 2027?
Trade Desk’s profit could rise on lower costs. The company cut about 15% of its global workforce in the third quarter, reductions that management expects to bring more than $100 million of gross savings in 2027. Management also expects expense growth to slow meaningfully from 2026.
On the sales side, the third quarter had help that will not repeat: about 3 percentage points of revenue came from business with a strategic partner that management does not expect to recur, so the quarter’s fall in revenue from a year earlier would have been deeper without it. Management said the underlying business still beat its own expectations, yet it guided fourth-quarter revenue to at least $755 million, against $736 million in the third quarter, and said it is not expecting the normal seasonal lift into the holidays. That floor is about 11% below the $847 million of revenue in the same quarter a year earlier.
Trade Desk is expected to report its fourth quarter in February 2027, and its operating margin for that quarter, against 30.3% a year earlier, is the number to watch. Until that report, adding at today’s price means paying for profit, more than half of which comes from a quarter that is about to drop out.
Not Sure Trade Desk Is Worth It At This Price?
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