Trade Desk Inc (NASDAQ:TTD) shares plummeted after the digital marketing technology firm posted disappointing fourth quarter earnings and first quarter guidance below expectations.
Revenue of $741 million was short of the $759 million expected while earnings per share of $0.59 was ahead of estimate of $0.57.
For Q1, the company guided revenue of $575 million, below estimates of $581.5 million and earnings of $145 million, missing estimates of $192.7 million.
Wedbush analysts highlighted that this was the first public quarter excluding the onset of the pandemic that the company has missed expectations.
The analysts repeated their ‘Outperform’ rating on Trade Desk but reduced their price target to $120. Shares of Trade Desk finished Thursday’s trading session down 33% at about $82.
“Investors expected another healthy beat given the company's history of exceeding its own guidance, as well as the strength of the broader digital advertising market,” they wrote.
“Shares are down as the underperformance in the quarter amplifies a number of recent debates, including the strength of the company’s competitive position, its relationship with key agency partners, and the ultimate size of the long-term market opportunity,” analysts wrote.
However, they noted that while they understand the reaction in shares, they do not believe Trade Desk’s long-term opportunity is impaired based on results and guidance.
The outlook for 1Q revenue was only 1% below their estimate and the consensus.
“We think the secular shift of linear TV ad budgets to connected TV (CTV) is well underway and the opportunity for The Trade Desk is massive as only approximately 25% of CTV spending is programmatic and only a fraction of that is fully biddable programmatic,” Wedbush wrote.
“This transition is structural and will unfold over a multi-year period with the Trade Desk well-positioned to benefit as the leading independent demand-side platform with best-in-class product capabilities and strong relationships with key publishers.”