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Following recent comments from the president of the New York Federal Reserve, expectations for a possible rate cut in December have increased, benefiting growth-oriented software companies including The Trade Desk.
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This shift in expectations has strengthened sentiment in the software sector, underscoring investors’ increased optimism about earnings potential amid lower financing costs.
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We’ll explore how hopes for a rate cut could impact The Trade Desk’s prospects, given its role in growth-oriented digital advertising.
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To be a shareholder in The Trade Desk, you have to believe in the continued shift of advertising dollars from traditional to digital, especially connected TV (CTV), and in the company’s ability to gain market share with its AI-driven platform. While renewed hopes for a rate cut in December have improved near-term sentiment for growth stocks like The Trade Desk, the largest short-term catalyst, further adoption of CTV and the Kokai platform remains the same. The biggest risk remains sales concentration among major global brands amid volatile macro conditions, and this news does not materially change that outlook.
A recent announcement that is particularly relevant here is the mandatory migration of advertisers to the Kokai platform. As Trade Desk phases out its older Solimar interface, some buyers have reported friction and operational issues. This transition is of great importance in the context of business catalysts, as widespread adoption and satisfaction with Kokai is critical to driving future revenue growth and platform efficiency.
However, investors should not overlook the risk that if major brands scale back ad spend or encounter disruptions on the new platform…
Read the full story on Trade Desk (it’s free!)
Trade Desk’s story predicts revenues of $4.3 billion and profits of $823.2 million by 2028. This requires annual revenue growth of 17.1% and profit growth of $406 million from current revenues of $417.2 million.
Find out how Trade Desk’s predictions yield a fair value of $68.97, up 74% from the current price.
Fair value estimates from 38 members of the Simply Wall St Community for Trade Desk range widely from US$39.48 to US$111.31 per share. While future CTV growth will be an important catalyst, the widely divergent views from investors reflect uncertainty about how competition and the changing needs of advertisers could impact long-term revenues and margins.
Discover 38 other fair value estimates on Trade Desk – why the stock could be worth more than 2x its current price!
Do you disagree with existing stories? Create your own investment product in less than 3 minutes. Extraordinary investment returns rarely come from following the herd.
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A good starting point for your Trade Desk research is our analysis which highlights three key rewards that could impact your investment decision.
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Our free Trade Desk research report provides comprehensive fundamental analysis summarized in a single image: the Snowflake, making it easy to assess Trade Desk’s overall financial health at a glance.
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This article from Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts using only an unbiased methodology and our articles are not intended as financial advice. It is not a recommendation to buy or sell any stock and does not take into account your objectives or financial situation. We aim to provide you with targeted, long-term analysis based on fundamental data. Please note that our analysis may not take into account the latest price-sensitive company announcements or quality material. Simply Wall St has no positions in the stocks mentioned.
Companies discussed in this article include TTD.
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