Please ensure Javascript is enabled for purposes of website accessibility
Free Article Join Over 1 Million Premium Members And Get More In-Depth Stock Guidance and Research

Why The Trade Desk Stock Soared 59% in November

By Jon Quast - Dec 2, 2020 at 3:23PM

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

Expectations were riding high, but the company overdelivered all the same.

What happened

Shares of The Trade Desk ( TTD -6.65% ) were up 59.1% in November, according to data provided by S&P Global Market Intelligence. The stock exploded over 40% higher in the early days of the month due to releasing an earnings report that impressed Wall Street. It pulled back a little after the U.S. presidential election, along with many other hot growth stocks, before climbing to new heights as the month went on.

So what

The Trade Desk reported its results for the third quarter of 2020 on Nov. 5. Revenue was up 32% year over year to $216 million, and net income more than doubled to $41 million, beating analysts' expectations. Particularly impressive was the company's 100% revenue growth in connected-TV advertising, leading to analyst upgrades. The stock skyrocketed immediately following all of this.

A businessman rides a rocket ship expelling cash exhaust over a multicolored bar chart.

Image source: Getty Images.

Beyond the solid Q3 report, The Trade Desk likely continued to head higher as investors digested the company's leadership role in Unified ID 2.0. Companies like Google (owned by Alphabet) and Facebook have made billions in ad revenue because of the return on investment provided by their targeted-advertising technology. However, The Trade Desk is developing Unified ID 2.0 as a less proprietary way to deliver the same results.

Top ad-tech companies like Magnite, Criteo, and LiveRamp are all on board with the project, and The Trade Desk is leading the charge. In the earnings call to discuss Q3 results, CEO Jeff Green said, "I firmly believe that Unified ID 2.0 will reach critical mass and adoption next year."

Now what

As already mentioned, The Trade Desk stock momentarily pulled back right after the election. For some, the election signaled a return to normalcy. As a result, this year's big stock winners sold off, and more traditional businesses saw their stocks gain. During those few days, you may have heard a pundit or two say something like "investors are rotating out of growth and into value." Translation: If it's up, then it's going down; if it's down, then it's going up.

I'd caution investors from getting too wrapped up in headlines like that. Stocks need to be taken on a case-by-case basis. In the case of The Trade Desk, the growth of its business over the past several years is real and shouldn't be dismissed. Perhaps it could trade lower in the short term because of the so-called investor rotation. But this is a company chasing a massive global-advertising market and will likely keep creating shareholder value over the long haul.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

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
TTD
$89.51 (-6.65%) $-6.38
Alphabet Inc. Stock Quote
Alphabet Inc.
GOOGL
$2,840.03 (-0.68%) $-19.29
Meta Platforms, Inc. Stock Quote
Meta Platforms, Inc.
FB
$306.84 (-1.14%) $-3.55
LiveRamp Holdings, Inc. Stock Quote
LiveRamp Holdings, Inc.
RAMP
$44.77 (-1.52%) $0.69
Criteo S.A. Stock Quote
Criteo S.A.
CRTO
$38.67 (-0.54%) $0.21
Alphabet Inc. Stock Quote
Alphabet Inc.
GOOG
$2,850.41 (-0.87%) $-25.12
Magnite, Inc. Stock Quote
Magnite, Inc.
MGNI
$16.88 (-1.57%) $0.27

*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
624%
 
S&P 500 Returns
140%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 12/06/2021.

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

Our Most Popular Articles

Premium Investing Services

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