Investors may look back at 2025 as the year investors turned on The Trade Desk (TTD 0.73%) stock. Other than the pullback in 2022, The Trade Desk stock had generally moved higher since its 2016 IPO.
However, the 70% sell-off over the last 12 months has been so severe that the stock price is back to levels first seen in 2020. Consequently, the question for investors is whether The Trade Desk stock can stage a comeback over the next five years or have its days of growth come to an end?
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The state of The Trade Desk
If looking closely at the digital ad industry, one can understand why The Trade Desk's platform was so popular. It helped advertisers and ad agencies use analytic tools, including artificial intelligence (AI), to find the available ad slots where an ad can best reach its desired audience, and presumably, drive more business back to its customers.
The Trade Desk also had the added advantage of being a neutral platform. While Alphabet's Google and Amazon can perform these functions, they have a bias toward their own platforms, which may not always be the best choice for a given advertiser.
Unfortunately, business conditions have turned against The Trade Desk in recent months. Some of the problems are issues The Trade Desk has faced throughout its history. These include economic uncertainty, prompting companies to scale back on ads, or data privacy regulations, making it more difficult for the company to obtain the needed data to make decisions.
Now, competition and technological change have more directly pressured the company. Platforms like Google and Amazon have increasingly become less accessible to The Trade Desk. Although this does not prevent interaction between The Trade Desk on these platforms, they bar The Trade Desk from buying ads on owned platforms. Amazon also operates on sales data, which may give it an advantage over The Trade Desk.
Moreover, AI search engines increasingly bypass traditional advertising. If one announces what they want on a prompt, an AI tool can lead customers directly to desired goods and services without a consumer having to see a single ad.
Industry analysts should not assume that advertising is dead, but the industry will have to at least change its approach if it wants to stay relevant. The Trade Desk bulls are optimistic given its pivot into connected TV (CTV), which has become an increasingly critical part of the business. Knowing that, The Trade Desk's next five years could hinge on how it addresses this issue.
The Trade Desk's financials
Fortunately for The Trade Desk's bulls, the company's financials do not seem to confirm the worst fears about the industry, but growth does appear to be in a slowing trend.
In the first nine months of 2025, its $2.05 billion in revenue increased by 20% compared to the same period in 2024. The good news is that customer retention remains above 95% just as it has for the last 11 years.
Over that period, income tax expense rose by 74%. Fortunately, that did not stop the net income in the first three quarters of 2025 from reaching $256 million, a 22% improvement from year-ago levels.
Still, the future looks less bright. For 2025, analysts believe yearly revenue growth will come in at 18%, with a further slowing to 16% in 2026.
NASDAQ: TTD
Key Data Points
Knowing that, investors may question if valuations have fully adjusted to this new reality. Its P/E ratio, which had risen to the 160 range as recently as a year ago, has fallen to 40, with its forward P/E at just 17! Now, with the stock trading at 52-week lows, some investors have to ponder whether it can stage a recovery over the next five years.
The Trade Desk in five years
Given the changing nature of the ad business, investors should stay cautious about the Trade Desk over the next five years.
Admittedly, the changing nature of the ad industry makes predicting the direction of The Trade Desk a more challenging task. Also, competition from Google, Amazon, and others adds to the difficulty.
Nonetheless, the 95%-plus retention rate shows its customers have remained loyal to the platform as it continues to grow. Additionally, its forward P/E ratio of 17 is a bargain valuation that could help foster a recovery, especially if it can address some or all of its current challenges in the ad market.
Ultimately, navigating The Trade Desk's next five years will bring considerable uncertainty, and knowing that, investors should probably treat it as a more speculative stock.
