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Why The Trade Desk, Inc. Stock Popped Tuesday

By Daniel Sparks - Sep 25, 2018 at 3:43PM

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This analyst thinks The Trade Desk's Next Wave product launch is a game-changer.

What happened

Shares of The Trade Desk (TTD -1.94%), provider of a programmatic digital ad-buying platform, jumped on Tuesday, rising as much as 10.8%. As of 3:23 p.m. EDT, the stock was up 10.6%.

Investor bullishness toward the stock likely reflects a big price target increase for The Trade Desk by RBC Capital; an analyst from the firm increased his price target by 35%. 

A person looking at metrics and charts on a computer

Image source: Getty Images.

So what

RBC Capital analyst Mark Mahaney's optimism for The Trade Desk this week comes after he reviewed the company's recent release of its Next Wave platform, which The Trade Desk CEO Jeff Green said in the company's most recent earnings call represented its biggest product launch ever. "Internally, we've likened this release to Apple's first launch of the iPhone," Green said. 

The Trade Desk explained Next Wave in its second-quarter earnings release:

The Next Wave includes three game-changing components: Koa, a powerful artificial intelligence (AI) agent; The Trade Desk Planner, a data-driven media planning tool; and Megagon, our intuitive new user experience.

"Our due diligence and discussions with management leave us with the impression that client feedback has been very positive," said Mahaney (via Investor's Business Daily) about The Trade Desk's Next Wave, "with the potential for even greater client spend retention and new customer wins."

Mahaney raised his 12-month price target for the stock from $126 to $170. Even after today's gain, shares are trading well below this level -- at $153.

Now what

The Trade Desk has seen significant momentum in its business recently, prompting management to raise its outlook for revenue and adjusted EBITDA. The company said in its second-quarter update it expects full-year 2018 revenue of "at least" $456 million, up from a previous forecast for $433 million. For its adjusted EBITDA in 2018, management now expects $140 million, up from guidance for $133 million. 

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