Shares of The Trade Desk (TTD +2.96%) are down nearly 50% since the start of 2025. And investors aren't used to seeing this. The advertising-technology (adtech) company has created a lot of shareholder value since it went public in 2016 -- the stock has gained about 2,000% in value even after including its current drop.
The Trade Desk stock has consistently outperformed its regular financial guidance since going public. In other words, if management said it was going to report revenue of $100 million, it would actually report revenue of $101 million when the time came. This was important. It showed that the company could forecast demand for its products and services. And management also focused on trust-building by not over-promising.
The Trade Desk earned investors' trust. But the company's reputation took a hit in 2025. In the fourth quarter of 2024, the company generated revenue of $741 million, below its guidance of revenue of $756 million. Founder and CEO Jeff Green said, "For the first time in 33 quarters as a public company we fell short of our own expectations." And this planted doubt in the minds of investors.
NASDAQ: TTD
Key Data Points
The Trade Desk stock plunged now that investors' expectations went unmet. But here are three reasons why this is a must-buy stock for long-term investors now.
1. The opportunity is big
For investors who buy individual stocks, long-term revenue growth should absolutely be among your top considerations. Studies show that many of the best-performing stocks over the long term were able to sustain above-average top-line growth.
To sustain growth over the long term, the opportunity itself must be big. And The Trade Desk is certainly chasing a big market. The company offers programmatic advertising, which basically means that it can better target consumers with relevant ads. For its advertising customers, the upside is that they can get better results at a cheaper price.
The Trade Desk is growing particularly fast in connected-TV (CTV). The shift from linear TV to streaming is ongoing. Many streaming services are already ad-based, but even paid subscription services are supplementing ads. And The Trade Desk is one of the best businesses for facilitating this shift.
The Trade Desk estimates its total addressable market at more than $935 billion compared to the $12 billion that its business controls today. To address its market in full, it will compete against businesses such as Alphabet and Meta Platforms head on. That's ambitious, yes. But no one can say that this is a small idea -- it's huge.
If growth is important for stocks, The Trade Desk is in the right industry.
2. The track record is (still) impressive
At this point, I want to make something very clear: In calling The Trade Desk a must-buy stock, I'm not saying that it's a guaranteed winner from here. No one can say that with certainty. There are plenty of reasons that it could fail to make investors money. And the aforementioned competition from juggernauts such as Alphabet is a good reason to have a healthy dose of skepticism.
That said, The Trade Desk has consistently punched above its weight class. Management outperformed its guidance in 32 out of 33 quarters. It's more reasonable to assume that the latest quarterly miss is a one-time anomaly. It would take more misses to establish a more troubling trend.
Giving The Trade Desk's management the benefit of the doubt, it should be able to restore investors' trust in short order. CEO Green says that its miss was self-inflicted and not the result of competition or industry changes. The company simply wasn't optimized for its new, larger scale (it just surpassed $2 billion in annual revenue) and it needed to make organizational changes to scale from here.
Assuming this experienced management team is right, then this will be just a short-term blip. And The Trade Desk will be better built to scale from here.
3. The valuation is more attractive
I'm not necessarily saying that The Trade Desk stock is cheap today. But on a relative basis, it's getting interesting. Measuring either on a price-to-sales basis or a price-to-free-cash-flow basis, the valuation for The Trade Desk stock is down about 50% from its long-term averages.
TTD PS Ratio data by YCharts
Keep in mind that these metrics don't look cheap relative to a traditional value-investor mindset. But failing to account for a high growth rate can prevent investors from recognizing a good long-term value. In short, if The Trade Desk continues to take market share, it can create a lot of shareholder value in the years to come.
Not to mention, if The Trade Desk restores investors' confidence, it may get its premium valuation back.
In conclusion, The Trade Desk could ultimately fail to live up to its potential and the valuation might not have hit rock bottom. But the company is chasing a huge opportunity, it has a stellar track record, and it's rarely been this cheap to buy -- three reasons that The Trade Desk stock is a must-buy, even if investors merely start nibbling today and slowly buy more in the weeks and months ahead.
