What happened
Shares of The Trade Desk (TTD 4.15%) were moving higher today, along with a surge from Meta Platforms (META 2.98%) after the Facebook parent reported fourth-quarter earnings last night.
While Meta's numbers weren't particularly strong, the surge in the stock showed that market sentiment could be shifting in favor of digital ad stocks like The Trade Desk and Meta.
As of 1 p.m. ET, Trade Desk was up 9.2%, while Meta had gained 26%.
So what
There was no particular company-specific news driving The Trade Desk stock higher, but investors seemed to believe that the market's response to Meta's earnings was bullish for the ad tech company, which operates as a demand-side platform, helping brands run and efficiently manage ad campaigns.
Oddly, Meta's fourth-quarter numbers weren't particularly impressive, as revenue fell 4% and it forecast another decline in revenue in the first quarter, which would seem to be bearish for the broader digital advertising industry. As the owner of Facebook and Instagram, Meta is the second-largest digital advertising platform in the world behind Alphabet, so it's something of a bellwether for the industry.
Now what
Meta's comments mostly signaled that it continued to see macroeconomic headwinds in advertising demand. Though it did grow ad impressions in the quarter by 23%, price per ad decreased 22%, a reflection of ads increasing on lower-monetizing geographies and surfaces, and lower demand.
Like Meta, Trade Desk stock fell sharply last year due to the slowdown in the ad industry, even though The Trade Desk's results were strong. Today's surge in Meta stock seems to signal that investors are turning bullish on the digital advertising industry again, which is good news for The Trade Desk.
We'll learn more when the adtech company reports fourth-quarter earnings on Feb. 15. Analysts are expecting 24% revenue growth to $490.8 million and for adjusted earnings per share to fall from $0.42 to $0.36.
