What happened
Shares of The Trade Desk (TTD 3.35%) gained 22.7% in February 2022, according to data from S&P Global Market Intelligence. The provider of tools and markets where other companies buy and sell digital advertising space went through the same magnified volatility as everybody else but came up roses on the other side for two good reasons.
So what
February was a turbulent month for Wall Street in general. First, an unpredictable earnings season sent stock prices up or down on a daily basis as market leaders and industry titans reported strong or disappointing quarterly results. As usual, richly valued growth stocks like The Trade Desk posted wider price swings as these market turns passed by. Then, rising tension between Russia and Ukraine eventually resulted in military action, with sharp and sometimes surprising effects on the stock market. Again, The Trade Desk dove deeper and jumped higher than most stocks as this high-stakes situation developed.
But all of that was just background noise to the two events that really drove The Trade Desk's stock skyward in February.
- The company crushed Wall Street's expectations in its own fourth-quarter report. Your average analyst would have settled for earnings near $0.28 per share on revenue in the neighborhood of $289 million. Instead, The Trade Desk reported earnings of $0.42 per share and $396 million in top-line sales. Revenue guidance for the next quarter also came in well above the analyst consensus at the time. In short, this report made it clear that the ad-selling business is booming.
- Alphabet (GOOG 0.74%) (GOOGL 0.55%) subsidiary Google announced that its privacy-enhancing upgrades to the Google Chrome browser would extend to the mobile platform Android as well. The Trade Desk CEO Jeff Green saw this move as a well-thought-out approach to mobile privacy. In particular, Green argued that the so-called Privacy Sandbox should serve as "an amazing setup" for his own company's privacy-protecting ad-tracking system.
Image source: Getty Images.
Now what
On the fourth-quarter earnings call, Green said that Google is setting the stage for The Trade Desk's Unified ID 2.0 system to succeed without taking a leading role in that platform's development.
"If I'm Google ... and I have to respond to all of these pressures from [regulators and consumer watchdogs], I actually want to see things like UID2 succeed. I'm under way too much scrutiny to endorse it or especially to propose it myself, but I want to see it succeed," he said. "In other words, I can't carry the ball, but I can block."
If a company is getting support from another business in the online marketing sector, I can't think of a better silent partner than Google. It's no surprise to see The Trade Desk's stock soaring while that potential tailwind is taking shape behind it.
