Shares of The Trade Desk (TTD 2.82%) have been pummeled in early 2026. And after an already rough stretch, the stock fell sharply in after-hours trading on Wednesday following the company's fourth-quarter results and first-quarter guidance.
With such a dramatic stock price crash, it must be time to buy. Right?
Not necessarily.
Unfortunately, the digital ad-buying specialist's latest report and outlook raised some red flags. And that is on top of another recent chief financial officer change, leaving the company with an interim CFO for now.
Image source: Getty Images.
Slowing growth and dismal guidance
The Trade Desk said fourth-quarter 2025 revenue rose 14% year over year to $847 million. Highlighting how the company's growth has been decelerating, The Trade Desk's revenue grew 25% in the first quarter of 2025, followed by 19% growth in Q2 and 18% growth in Q3.
And here's where things get even more concerning. The company's guidance calls for first-quarter 2026 revenue of at least $678 million, implying 10% year-over-year growth.
For some companies, double-digit growth like this is fine. For The Trade Desk, however, it's dismal in the context of its historical growth rates -- and it's even disappointing in the context of its beaten-down valuation.
And it is not just the company's revenue setup that is getting weaker. The Trade Desk guided for adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) of about $195 million in the first quarter of 2026. This compares to the adjusted EBITDA of $208 million in the first quarter of last year.
So the outlook implies both slower revenue growth and lower adjusted EBITDA.
That is a tough setup, and indicative of how the growth story has dramatically shifted in recent quarters.
A look at The Trade Desk's post-earnings valuation
The stock's decline has brought the valuation down meaningfully. But it still isn't priced at a level that makes it a clear buy.
After growing its generally accepted accounting principles (GAAP) earnings per share by 15% year over year in 2025 to $0.90, the stock now trades at a price-to-earnings ratio of about 23 (assuming a stock price of about $21).
That's not an extreme multiple for a great business -- but it is still a difficult valuation when the company is guiding to 10% revenue growth in Q1 and lower adjusted EBITDA.
The other issue is the leadership turnover. The company recently announced another CFO transition and is now operating with an interim CFO while it searches for a permanent successor. There's no rule that says an interim CFO means something is wrong. But it does not help investor confidence at a time when the company needs to execute well.
NASDAQ: TTD
Key Data Points
In its fourth-quarter earnings call on Wednesday, The Trade Desk CEO Jeff Green noted that the company has been operating "against a backdrop of macro uncertainty..." And that may be true. But this uncertain market hasn't stopped some major digital advertising businesses from growing at spectacular rates.
Meta Platforms (META 2.55%), for example, grew its fourth-quarter revenue 24% year over year. And Meta's revenue outlook for the first quarter of 2026 is $53.5 billion to $56.5 billion, implying about 30% growth at the midpoint versus first-quarter 2025 revenue of $42.3 billion.
Not only does this comparison highlight The Trade Desk's comparatively poor performance in the same macroeconomic environment in which Meta is operating, but it also shows how investors can alternatively buy a faster-growing, more dominant digital advertising business at a comparable earnings multiple.
Unfortunately, The Trade Desk stock does not look like a buy today, even after the stock has been crushed.
Of course, if the company finds a way to return to faster top-line growth that meaningfully outpaces its cost and expense growth, this could prove to be an excellent entry point in hindsight. But given the first-quarter guidance and the recent trend in the company's growth rate, I would prefer a deeper discount before buying shares.
