The Trade Desk (TTD 1.70%) has long been viewed as one of the purest ways to invest in the growth of digital advertising outside the walled gardens of Google, Meta Platforms, and Amazon. But on Aug. 8, the stock suffered its steepest single-day decline in history, falling nearly 39% after posting quarterly results that rattled Wall Street.
For a company that had only just joined the S&P 500 in July, the collapse was dramatic. It also raises a simple but important question for long-term investors: What's next for the tech company?
Image source: Getty Images.
Why did the stock fall so hard?
The Trade Desk has been a growth darling over the years, thanks to its consistent track record of exceeding its guidance. But things haven't been that smooth for the programmatic advertising company lately.
One thing to note is that growth has been decelerating recently. Revenue rose 19% year over year to $694 million in Q2 2025, but that growth rate marked a clear slowdown from prior periods. Management guided for at least $717 million in Q3 revenue, implying just 14% growth -- a sharp deceleration for a stock that has been used to meeting or exceeding investor expectations.
Several factors contributed to the slower growth. First, the company has been slow in transitioning toward its artificial intelligence (AI) platform, Kokai, which is essentially an execution issue. However, a bigger challenge lies ahead, stemming from an intensifying competitive environment.
For instance, Amazon is rapidly expanding its advertising business, leveraging its connected TV (CTV) and huge ecosystem. Unlike The Trade Desk, which positions itself as a neutral platform for advertisers, Amazon owns both the supply and the sales channels. That vertical integration gives it advantages in data and scale that many fear could erode The Trade Desk's moat.
It didn't help that the adtech company announced a significant management change during its earnings release, where longtime CFO Laura Schenkein will step down later this month and board member Alex Kayyal will step into the role. While Schenkein will stay on through year-end to support the transition, the timing unsettled the market. Investors often interpret a sudden CFO change during a challenging stretch as a signal of instability.
In short, The Trade Desk has a lot of work ahead of it to prove to investors that its current challenge is temporary, not structural.
Looking at the bigger picture
While short-term pain is real with higher execution risk, it is also worth zooming out to look at the longer-term picture.
To start, The Trade Desk remains the largest independent demand-side platform (DSP) globally, so its leadership remains intact, at least for now. The company's positioning as the "anti-walled garden" continues to resonate with advertisers who want transparency and control.
Secondly, its AI engine, Kokai, is gaining adoption (though not as fast as investors would like). The advancement of AI technology is an irreversible trend, so The Trade Desk's positioning remains the right direction forward.
Third and most importantly, it is riding some of the most significant secular tailwinds, such as retail media and CTV. Even if competition is fierce, these segments are growing far faster than the broader ad market, so there will be opportunity for more than one player to succeed.
In other words, the company's long-term thesis hasn't evaporated. The question is whether investors are willing to stomach near-term uncertainty as the company works on solving its problems.
What does it mean for investors?
The Trade Desk's collapse was painful, highlighting real risks in competition, execution, and valuation. However, the company remains at the heart of two of the most significant secular shifts in advertising: the migration to the open internet and the rise of retail media and connected TV.
For investors with a long-term horizon, this kind of sell-off is an opportunity. Still, they should not act until they have greater visibility on the turnaround. Instead, investors should monitor these areas as The Trade Desk addresses its challenges.
- Next earnings call: Does management defend or reset guidance further?
- CFO transition: Can Kayyal quickly establish himself and help the CEO regain investor trust?
- Competition: How Amazon, Google, and streaming players like Netflix or Roku position themselves in CTV will be critical.
Only with a clear sign of improvement should investors make their next move.
