Trade Desk Inc (NASDAQ:TTD) hit a speed bump in 3Q, catching analysts by surprise and raising concerns about the company's performance and outlook for the future.
While quarterly revenue outpaced street estimates by 1% and accelerated to an impressive 25% year-over-year growth, concerns arise from the unexpected 4Q guidance, which forecasts over 18% year-over-year revenue growth, 5% below street expectations.
“It appears that much of the early 4Q softness is macro-related, with notable slowdowns in auto and consumer electronics,” analysts wrote.
“We are more cautious on digital advertising, as TTD's exposure to the majority of F500 companies could serve as broader industry read-through.”
This exposure raises concerns about a broader industry slowdown, potentially impacting The Trade Desk's growth trajectory.
Jefferies analysts question whether the below-consensus 4Q guidance incorporates enough conservatism. Despite a relatively easy 4Q comparison and positive commentary from digital advertising peers, Jefferies suggests that investors may be disappointed with the guidance.
With the anticipated 4Q slowdown, the debate shifts to whether The Trade Desk can achieve over 20% revenue growth in FY24.
Jefferies takes a more cautious stance, lowering its FY24 estimates, including a 2% reduction in revenue growth assumptions. Analysts have lowered the price target on The Trade Desk from $80 to $60 to reflect a lowered FY24 revenue estimate by 2% and a decrease in FY24 EBITDA by 9%.
Jefferies is maintaining a "Hold" rating on The Trade Desk.
Shares of The Trade Desk plummeted 20% on Friday morning at $61.39.