Please ensure Javascript is enabled for purposes of website accessibility

Why Shares of The Trade Desk Soared Friday

By Daniel Sparks - Updated Feb 28, 2020 at 2:05PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Better-than-expected fourth-quarter results and guidance for accelerated revenue growth in Q1 have investors looking up.

What happened

Shares of The Trade Desk (TTD 7.06%) are soaring impressively on Friday, even as the market falls again amid coronavirus fears. The stock of the digital ad-buying specialist is up more than 12% as of 1:10 p.m. EST today.

The tech stock's jump follows the company's better-than-expected fourth-quarter results, which were announced after market close on Thursday. While investors were likely pleased with the company's strong growth in revenue and earnings per share during the period, the most upbeat takeaway from the report was The Trade Desk's impressive outlook for its first quarter and the full year.

A chart showing a stock price moving higher

Image source: Getty Images.

So what

The company reported revenue of about $216 million, up 35% year over year. Adjusted EPS rose 37% year over year to $1.49. Both figures beat analysts' average forecasts. 

But management's outlook was particularly notable. The Trade Desk guided for first-quarter revenue of $169 million, implying 40% year-over-year growth. This would mark a significant acceleration from 35% revenue growth in Q4. Furthermore, the company guided for 2020 adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) of $259 million, or a 30% adjusted EBITDA margin. This is the company's highest-ever initial full-year guidance for its adjusted EBITDA margin.

Now what

The Trade Desk's momentum going into 2020 is impressive. Perhaps the best way to capture management's bullishness about the year is to look at its guidance for ad spend growth on its platform. CEO Jeff Green said he expects ad spend in 2020 to be at least $4.24 billion. This implies about 36% year-over-year growth in ad spend versus 33% in 2019.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

The Trade Desk Stock Quote
The Trade Desk
$52.49 (7.06%) $3.46

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/28/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.