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How Shares of The Trade Desk Gained 30% in June

By Anders Bylund – Updated Jul 6, 2020 at 4:52PM

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Digital ad buyers are struggling to compose effective marketing campaigns, so they turn to companies like this one for help.

What happened

Shares of The Trade Desk (TTD 0.42%) rose 30.5% in June, according to data from S&P Global Market Intelligence. The surge started with a rosy business update from online ad services peer Criteo (CRTO -0.10%) and ended with a bullish analyst report.

A red arrow smashes upward through a wall of blue bricks.

Image source: Getty Images.

So what

Digital advertising businesses of all stripes had expected revenue to fall in the second quarter as ad buyers scaled down their campaigns amid the COVID-19 pandemic. But Criteo's mid-quarter business update in early June showed stronger sales than expected, undermining the negative expectations in the ad sector. Criteo's stock closed 19% higher that day and The Trade Desk rode Criteo's coattails to a 12% single-day gain.

On June 22, analyst firm Needham lifted its price target on The Trade Desk from $370 to a Street-high $475 per share. Analyst Laura Martin cited The Trade Desk's position as the "largest demand-side platform in the open internet" and argued that the coronavirus crisis should be a positive game-changer for the company. The Trade Desk is Martin's top pick for 2020, ahead of ad-powered media streaming expert Roku (ROKU -3.58%).

Now what

Needham's analysis showed that ad buyers are struggling to develop effective marketing campaigns in this uncertain business environment, opening the door for data-driven campaign-boosting platforms like Criteo and The Trade Desk to step in and find new customers. Ms. Martin's stance resonates strongly with me since I opened real-money positions in Criteo, Roku, and The Trade Desk near the market bottom in March. Those positions have returned 40%, 55%, and 157% so far, and all three have a lot of long-term growth left in their tanks.

Anders Bylund owns shares of Criteo, Roku, and The Trade Desk. The Motley Fool owns shares of and recommends Roku and The Trade Desk. The Motley Fool recommends Criteo. The Motley Fool has a disclosure policy.

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