Trade Desk shares slump as analysts turn cautious on digital adtech
Wall Street maintains a consensus "Hold" rating for The Trade Desk after a 21.9% post-earnings drop, with the mean price target set at $15.05.
The Trade Desk shares have significantly underperformed the broader market over the past year, falling 74.8% while the S&P 500 Index rose 18.4%. The digital advertising technology company, which maintains a market capitalisation of $6.2 billion, has also lagged the State Street Communication Services Select Sector SPDR ETF over the same period. On a year-to-date basis, the stock is down 64.7%, contrasting with an 11.8% increase for the S&P 500.
The recent decline was precipitated by weaker-than-expected second-quarter 2026 results released on 6 August. The Ventura, California-based firm reported revenue of $715 million and adjusted earnings per share of $0.34, both of which missed market expectations. Consequently, the stock tumbled 21.9% in the immediate aftermath of the announcement.
Profitability metrics also showed signs of stress during the quarter. Net income declined to $64 million, while adjusted EBITDA fell to $241 million, reducing the adjusted EBITDA margin to 34%. Management acknowledged that performance did not meet the company's standard, citing a complex environment for marketers.
Looking ahead, The Trade Desk provided guidance for the third quarter, projecting revenue of at least $650 million and adjusted EBITDA of approximately $160 million. For the fiscal year ending in December 2026, analysts expect the company's earnings per share to decline 43.3% year-over-year to $0.51. The firm's earnings surprise history has been mixed, with one beat and three misses in the last four quarters.
Among the 38 analysts covering the stock, the consensus rating stands at "Hold". This configuration is less bullish than it was three months ago, when 11 analysts issued "Strong Buy" ratings. Currently, the breakdown includes three "Strong Buy" ratings, one "Moderate Buy", 26 "Holds", one "Moderate Sell", and seven "Strong Sells".
Needham lowered its price target for The Trade Desk to $19 on 7 August while maintaining a "Buy" rating. The mean price target across the Street is currently $15.05, representing a 12.6% premium to the current price levels. The Street-high price target stands at $40, suggesting a potential 199.2% upside from current levels.
