The Trade Desk (TTD 1.76%) stock has taken a massive beating in the past year, losing 66% of its value as of this writing due to the company's slowing growth and the rising competition that it's facing in its business from tech giant Amazon.
Now, the company's fourth-quarter 2025 results (which were released on Feb. 25) have further dented investor confidence. Shares of the programmatic advertising company fell 5% after its latest quarterly report. Even though The Trade Desk's Q4 numbers exceeded expectations, a weaker-than-expected guidance led investors to press the panic button.
However, the sharp pullback in this tech stock may be an opportunity for savvy investors to buy a potential long-term winner. Let's look at two reasons why The Trade Desk's drop looks like a buying opportunity.
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The Trade Desk believes that it can compete with Amazon
The Trade Desk's programmatic advertising platform enables advertisers and brands to automate bidding and buying ad inventory using real-time data across channels such as display, audio, video, smartphones, connected television (CTV), and others. The company has been employing artificial intelligence (AI) to help brands analyze millions of ad impressions per second, enabling them to reach their target audience across relevant channels at the best possible price.
However, the competition from giants such as Amazon has hurt the company's growth of late. Its 2025 revenue increased by 18% to $2.9 billion, well below the 26% growth it recorded in 2024. The bottom line grew at a much slower pace of 6.6% to $1.77 per share. For comparison, Amazon's advertising revenue increased by 23% in Q4 2025 to $21.3 billion, well above the 14% jump in The Trade Desk's quarterly revenue.
NASDAQ: TTD
Key Data Points
The Trade Desk's management notes that the programmatic ad market saw surplus supply last year. The deep pockets of a tech giant such as Amazon seem to have weighed on The Trade Desk's margins, as it would need to offer more competitive prices to attract customers in a buyer's market. However, The Trade Desk's management is confident about the competitive strength of its programmatic ad platform.
Citing the example of a leading appliance manufacturer that compared The Trade Desk with Amazon's demand-side programmatic ad platform, management remarked on the latest earnings call:
They found that with The Trade Desk they were able to reach 70% more unique households, because we gave them access to a much wider range of relevant touchpoints with those consumers. With The Trade Desk, they were able to reach those consumers at 30% lower total cost. So significantly better reach, for meaningfully lower cost. And the kicker is that The Trade Desk's platform performed 6 times better in terms of delivering their campaign goals.
The Trade Desk believes that, because it doesn't prioritize any ad platform and helps advertisers buy ads objectively across the open internet, its programmatic platform can perform better than Amazon's from the cost and performance perspectives of advertisers. So, while The Trade Desk may be facing difficult times right now, it would be wrong to discount its long-term prospects, especially given the industry's growth potential.
This multi-trillion-dollar end-market opportunity could supercharge its growth once again
The programmatic advertising market was worth an estimated $833 billion in 2024, according to a third-party estimate. The size of this market is anticipated to hit almost $4.4 trillion by 2032, at an estimated annual growth rate of 23%. So, there is still plenty of room for The Trade Desk to regain its momentum and start growing again at a faster pace.
Of course, that's not going to happen overnight, as evidenced by its guidance. The Trade Desk expects year-over-year revenue growth of just 10% in the current quarter to $678 million.
With the advertising technology stock trading at 4 times sales following its latest drop -- a discount to the U.S. technology sector's average price-to-sales ratio of 8.3 -- opportunistic investors can consider initiating a long position in The Trade Desk, as it has the potential to make a comeback. In fact, the stock's 12-month median price target of $32 points toward 34% gains from current levels.
Any signs of an acceleration in its business could indeed help ignite a rally and send The Trade Desk soaring.
