What Happened: Shares of advertising software maker The Trade Desk (NASDAQ:TTD) jumped 19.9% in the morning session after the company reported fourth-quarter results and provided guidance for the next quarter, which blew past analysts' expectations for both revenue and adjusted EBITDA--a key profit measure. Its gross margin also improved during the quarter. Zooming out, the company is growing faster than the digital ad market, telling us that The Trade Desk is taking share. And the company is doing so profitably.
Overall, this was a very impressive quarter that should delight shareholders. Additionally on the capital allocation side, The Trade Desk announced a new share repurchase program that brings the total authorization to $700 million. Repurchases totaled about $650 million in 2023, and this is an overall signal at the strength and dependability of the company's free cash flow.
Is now the time to buy The Trade Desk? Find out by reading the original article on StockStory.
What is the market telling us: The Trade Desk's shares are very volatile and over the last year have had 14 moves greater than 5%. But moves this big are very rare even for The Trade Desk and that is indicating to us that this news had a significant impact on the market's perception of the business.
The biggest move we wrote about over the last year was 3 months ago, when the company dropped 29.1% on the news that the company reported third quarter results and provided revenue and adjusted EBITDA guidance below expectations. Management added that "we have seen more macroeconomic uncertainty at the start of Q4." The markets have been skittish about the macro, and The Trade Desk is a company heavily tied to macro-sensitive advertising, so the weak outlook was a cause for alarm.
On the other hand, its revenue narrowly topped analysts' expectations during the quarter. While it was objectively a mixed quarter for The Trade Desk since results were fine, the guidance was weak, and the market seemed spooked about the future.
The Trade Desk is up 27.5% since the beginning of the year, and at $89.92 per share it is trading close to its 52-week high of $91.26 from July 2023. Investors who bought $1,000 worth of The Trade Desk's shares 5 years ago would now be looking at an investment worth $5,564.