Shares of The Trade Desk (TTD, Financial) have dropped today by 4.96%, reflecting investor concerns over the company's high valuation, despite a strong third-quarter earnings report.
The Trade Desk (TTD, Financial) reported a 27% increase in revenue to $628 million, exceeding the anticipated $619.9 million. This growth was supported by the company's investments in its Kokai AI platform, which contributed to significant margin expansion under GAAP.
The company's robust customer retention of over 95% showcases a decade-long trend of stability and reliability. The expansion of its Unified ID 2.0 protocol, with new collaborations with Roku and Spotify, underscores the company's strategic maneuvers to enhance its market position.
The GAAP operating income of The Trade Desk (TTD, Financial) nearly tripled to $108.5 million, highlighting prudent spending practices. The adjusted earnings per share rose from $0.33 to $0.41, surpassing the consensus estimate of $0.39.
Looking ahead, the company anticipates revenue to hit at least $756 million in the next quarter, signifying a growth rate of at least 25% compared to the same quarter last year. In addition, the adjusted EBITDA is projected to be around $363 million, with a margin approaching 50%.
However, one of the main concerns for investors is the high valuation of The Trade Desk (TTD, Financial). With a P/E ratio nearing its one-year high at 251.9 and a P/B ratio of 25.76, the valuation appears steep. The recent stock price of $125.95 is also close to its 52-week high. According to the GF Value, The Trade Desk is considered "Modestly Overvalued", with a GF value of $104.85.
Despite the high valuation, The Trade Desk (TTD, Financial) exhibits strong financial metrics. The company maintains strong financial strength with an Altman Z-Score of 14.59 and a comfortable interest coverage. The firm also shows promise in its growth grade and financial health, marked with high GF scores.
