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Why The Trade Desk Stock Rebounded 15.3% in November

By Steve Symington – Dec 6, 2018 at 9:01PM

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The programmatic-advertising leader delivered another quarterly beat and raise last month. Here's what investors need to know.

What happened

Shares of The Trade Desk (TTD -6.86%) climbed 15.3% in November, according to data from S&P Global Market Intelligence, after the programmatic-ad specialist announced strong third-quarter 2018 results. That's not to say it was a smooth rise.

Shares initially endured a modest decline early last month on the heels of The Trade Desk's latest beat-and-raise report. In it, the company revealed that quarterly revenue had climbed 49.6% year over year, to $118.8 million, well above management's guidance for $116 million.

Trending toward the bottom line, Trade Desk saw adjusted EBITDA soar 50%, to $36.8 million, comfortably above its outlook for $30 million. Meanwhile, adjusted net income nearly doubled to $30.2 million, or $0.65 per share.

Man in background pointing to bar and line charts indicating gains.


So what

The Trade Desk credited its strength to broad-based growth across its various channels: mobile ad spending climbed 65%, connected TV skyrocketed tenfold, and audio ad revenue nearly tripled from the same year-ago period. The company also touted its enviable customer retention rates of more than 95%, extending a 19-quarter streak for the metric.

"As the worldwide programmatic advertising market grows, we continue to outpace that growth," added Trade Desk's founder and CEO, Jeff Green. "The need for objective, data-driven media buying is increasing."

Perhaps unsurprisingly, The Trade Desk shares ultimately resumed rising through the end of the month as investors absorbed the news -- though at least one vote of confidence from Wall Street helped spur that rise: SunTrust analyst Youssef Squali increased his per-share price target on Trade Desk to $130 and reiterated his "buy" rating shortly after the report, citing its "excellent execution" and "very favorable global secular tailwinds." 

Now what

For the current fourth quarter of 2018, The Trade Desk expects revenue of $147 million and adjusted EBITDA of $53 million. As such, the company increased its full-year 2018 guidance to call for revenue of "at least $464 million" (up from $456 million before) and adjusted EBITDA of $145 million (up from $140 million previously).

It's worth noting that The Trade Desk shares have more than tripled so far in 2018, so perhaps its initial pullback after last month's report shouldn't come as a complete shock. But in the end, it's evident the company is as strong as ever and its momentum remains intact. And I think the stock simply responded in kind.

Steve Symington has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends The Trade Desk. The Motley Fool has a disclosure policy.

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