An Update on The Trade Desk Stock (+53% in June 2021)

Back in May we published a post about why The Trade Desk stock price was dropping so quickly and what that meant for beginner investors like you (read that article here first if you need to get caught up).

For a quick recap for those who don’t have time to read the whole thing:

On December 22, 2020, TTD traded at $97. On May 10th, the low was nearly $49. Now, it’s hovering around $75. The market cap was $25 billion with $700 million of cash on the balance sheet. Overall, the business model is a great business model that shows just how good of an investment this stock was (and still is), especially when it was on sale for half the price that it was at the end of 2020 (and continues to be pretty cheap).

So, let’s take a look at where TTD stock is at in June 2021 and whether or not it’s still a good investment for you to make as a beginner investor looking to play the stock game long-term (because that’s what we’re all about here at Wealth Stack).

TTD Stock Prices June 2021

As of June 24th, The Trade Desk stock sits at about $75, which is up from its low price of $49 at the beginning of May. This signals a gain of just over 53% since we wrote the first article in May! 

And, it’s worth noting that the growth is far outpacing the growth seen in the technology sector, which has gained at a rate of just over 7% in roughly the same time period.

What Caused TTD Stock to Decline?

As mentioned in our previous post, The Trade Desk executed a 10 for 1 reverse stock split a few months ago. This effectively reduced the share price, for example, from $500 to $50 (10 for 1), allowing investors who wanted to invest small amounts of money to purchase shares a bit more easily.

The announcement of TTD’s stock split caused a further freak out in the company’s share price, along with fears surrounding changes in the digital advertising space. The entire market was affected by fears that third-party cookie deprecation would affect TTD’s ability to generate revenue.

While the over 50% growth in the past six weeks shows that those fears are slowly dying out, you’re probably still wondering just how much more the stock is expected to increase in price over the course of the summer and the rest of the year, and whether or not it makes sense to invest in TTD right now?

Digital Advertising Industry Stock Trends in 2021

While the time to purchase TTD stock would have been before the 10 for 1 reverse stock split, it’s still a good stock to invest in now while the prices are low but climbing. Why? 

First and foremost, it’s a good business, and when you’re learning to invest, you need to use a model such as Porter’s Five Forces to analyze whether or not a company is worth investing in (despite all of the internet hype around the stock itself, like in the case of GameStop).

Actually, investing in any business with this type of business model right now is a good idea. Digital advertising platforms are performing well on the market. And they are expected to continue to gain throughout the rest of the year and throughout the entire decade. Just take a look at some of the most prominent stats:

  • The online advertising market is expected to reach close to $1 trillion in value by 2025.
  • Digital ad revenues for 2020 reached over $500 billion.
  • Competitors of The Trade Desk such as Roku are also experiencing high growth. Roku revenue rose 79% from Q1 2020 to Q1 2021 (and they added 2.4 million accounts in Q1 2021).

Why are stocks in this industry performing so well? Well, for one thing, the pandemic forced all of us online (even more than we already were). Increased screen time means that digital advertising platforms have more eyes in front of their content more often. This, in turn, means that they can sell more ad space. 

This isn’t expected to slow down any time soon, especially not for The Trade Desk, which is an exceptionally managed business that continues to grow throughout 2021.

Should You Invest in TTD Stock in June 2021?

To answer this question, it helps to take a look at the company’s first-quarter report:

  • Revenue grew 37% year over year.
  • Revenue grew 33% from Q4 2020. 
  • EBITDA margins are looking good.
  • Earnings per share increased by 57%. And, customer retention is still strong. This means that, again, if you take a look at Porter’s Five Forces, indicates that TTD is a good business. If you haven’t noticed, we really love using this as a basis for general stock analysis.

What the market fears mentioned above regarding Apple tracking changes and changes to the way that similar businesses are able to generate revenue amid third-party cookie deprecation show is that TTD is able to withstand these types of changes (they even came up with their own solution, which is Unified 2.0, a “type” of cookies that enables consumer tracking).

Again, this hints that it’s a strong business with a strong business model. Add the stock split that occurred earlier in the year (that drastically reduced the price per share to allow beginner investors like you to get in with little cash) and you’ve got the perfect buying opportunity.

To top it all off, the company just announced their largest product launch yet on July 7th, 2021. With that announcement, TTD has already generated positive speculation about the growth of the company. This could, along with the continued increase in gains in the technology sector in general, prove to be profitable for those who invest in the stock now.

Wish you’d bought TTD stock back in May when we first wrote about it? Download the Wealth Stack app for free on the App Store or on Google Play. Join our community of beginner investors to receive expert stock tips and guidance.