Stock Market News: The Trade Desk Soars and Buffett's Annual Letter Looms

The stock market got a lift from China trade news despite a high-profile earnings miss that affected the Oracle of Omaha's empire.

Dan Caplinger
Dan Caplinger
Feb 22, 2019 at 11:40AM
Technology and Telecom

Friday got off to a good start for the stock market, as investors were pleased to hear reports that negotiations between the U.S. and China to avoid further trade-war escalation appeared to be going well. As of 11:30 a.m. EST, the Dow Jones Industrial Average (DJINDICES:^DJI) had gained 188 points to 26,038. The S&P 500 (SNPINDEX:^GSPC) rose 18 points to 2,793, while the Nasdaq Composite (NASDAQINDEX:^IXIC) climbed 62 points to 7,522.

Even though the overall market rose, earnings continued to have an impact on individual stocks. The Trade Desk (NASDAQ:TTD) was a big winner after reporting its latest results, while Warren Buffett's Berkshire Hathaway (NYSE:BRK-A) (NYSE:BRK-B) suffered losses on the eve of its release of the investing legend's annual letter to shareholders.

The Trade Desk hits a home run

The Trade Desk saw its stock climb almost 30% following the release of its fourth-quarter financial report. The company, which offers a programmatic advertising platform that allows customers to purchase ads more effectively, said that revenue for 2018 was up 55% from 2017 levels, accelerating from its 52% growth rate in the previous year. Moreover, adjusted earnings per share more than doubled from year-earlier levels.

Breaking wave with The Trade Desk logo and product name superimposed.

Image source: The Trade Desk.

Users have found that programmatic advertising offers more opportunities to use data to target marketing campaigns to those who are most likely to see and act on ads, and The Trade Desk has worked hard to give clients as many such opportunities as possible. Key initiatives include the launch of the Next Wave platform of new applications, the expansion of Connected TV to allow more granular distribution of advertising than ever before, and the Unified ID data tracking platform for customers.

Investors were nervous about The Trade Desk heading into the report, as analysts had recently questioned whether impressive gains had moved the stock's price too far too fast. With no end in growth in sight, those concerns proved misguided, and shareholders are more optimistic than ever about The Trade Desk's prospects.

Check out the latest The Trade Desk earnings call transcript.

More Buffett wisdom ahead

Meanwhile, shares of Berkshire Hathaway moved in the other direction, falling almost 2%. Buffett's shareholders are getting ready for the Berkshire CEO to offer them his annual letter, and many are looking to see what the Oracle of Omaha will have to say about the state of the markets in general and the latest moves from Berkshire Hathaway in particular.

Berkshire's stock took a hit today in part because of the pain that one of its largest investments suffered. Kraft Heinz shares were down more than 25% after the food giant announced poor results in its fourth quarter, including a massive $15.4 billion writedown in the value of goodwill tied to the Kraft and Oscar Mayer brands. Berkshire owns a roughly 27% stake in Kraft Heinz, and the poor performance will have an impact on first-quarter earnings if Kraft Heinz shares don't recover. This isn't the first challenge that Buffett has faced recently, with shares of top holding Apple also having plunged over the past several months.

Investors can expect Buffett's shareholder letter to evaluate Berkshire's performance in his usual candid and sober manner, with an emphasis on the long run and an acknowledgment that short-term returns can be volatile. Moreover, with more than $100 billion in cash available for investment, Berkshire has plenty of chances to make up for lost opportunities -- and many will want to look for signs of where Buffett will turn his attention next.