Trade Desk Inc. (TTD.US) shares experienced a sharp decline on Friday, with losses widening to approximately 26% shortly after the market opened. This followed a downgrade by investment bank Susquehanna, which revised its rating from "Positive" to "Neutral" and slashed its price target from $34 to $14, citing short-term execution challenges, weak advertiser demand, and pressured growth prospects.
The day prior, Trade Desk Inc. reported second-quarter results that fell short of market expectations, triggering a 23% intraday plunge and a closing loss of 6.8%. Susquehanna noted that the company's short-term operating environment remains difficult, with macroeconomic pressures, advertising pricing headwinds, and execution issues set to continue impacting future performance. The company's second-quarter revenue grew only 3% year-over-year, missing forecasts, while adjusted EBITDA and earnings per share also failed to meet analyst estimates.
The bank highlighted that demand from consumer goods and automotive advertisers has notably weakened amid geopolitical uncertainty, soft consumer demand, and persistent inflationary pressures, which are key factors behind the company's underperformance. In its report, Susquehanna stated, "The second-quarter results fell short of expectations, and the company continues to face ongoing challenges." Additionally, the institution pointed out that some advertisers are shifting to lower-cost advertising methods, further suppressing the company's growth.
Despite the downgrade, Susquehanna did not dismiss Trade Desk Inc.'s long-term prospects. The firm believes that connected TV remains a critical growth engine for the company, while retail media, international market expansion, artificial intelligence applications, and supply path optimization all still hold significant growth potential. However, given the downward shift in valuation assumptions and near-term fundamental pressures, Susquehanna lowered its valuation estimates, arguing that the stock will likely remain constrained by slowing growth and execution risks in the short term.