The Trade Desk stock has imploded: is it a bargain before earnings?

The Trade Desk stock price has crashed, erasing billions of dollars in value as growth concerns have remained.

It has dropped in the past five consecutive weeks, reaching its lowest level since April 2020.

As a result, its market capitalisation has dropped from $68 billion to $9.5 billion today.

The Trade Desk stock technical analysis

The weekly chart shows that the Trade Desk share price has crashed since December 2024 to the current $24.28.

It recently dropped below the key support level at $43, its lowest level in April last year and $38.30, its lowest point in July 2022.

The stock has crashed below all moving averages and the Supertrend indicator, a sign that bears remain in control today. Remaining below these indicators is a sign that bears remain in control today.

The Trade Desk stock has become highly oversold, with the Relative Strength Index (RSI) has dropped to 23, its lowest level in April last year.

Similarly, the Stochastic Oscillator and other oscillators have continued falling in the past few months.

Therefore, there is a likelihood that the Trade Desk stock price will rebound after it publishes its financial results as sentiment has remained so weak.

If this happens, the next key target to watch will be at $38.30, its lowest level in 2022.

TTD stock price chart | Source: TradingView 

The Trade Desk will publish its results this week

The Trade Desk is a top technology company that provides advertising technology solutions to companies like advertisers, including popular names like Walmart, Toyota, Unilever, and Danone.

The stock has crashed in the past few months as investors remain concerned about its business trajectory and the rising competition in the industry.

This trajectory has pushed more investors to downgrade the company.

For example, analysts at Weiss downgraded it from hold to sell, while Citigroup and Rosenblatt have also slashed their target.

The most recent downgrade came from Citizens, which downgraded the stock from market outperform to market outperform, citing the rising competition from companies like Amazon and AppLovin.

Also, there are concerns about generative AI, which will reduce the operational complexity of programmatic advertising. The report said:

"In particular, we believe Amazon is aggressively leaning into its DSP offering, with reported fees as low as a 1% take rate for programmatic guaranteed deals to attract advertisers.”

On the positive side, there are signs that the company is still doing well.

The most recent results showed that its business continued doing well even as its earnings missed its estimates.

Its revenue jumped to $739 million from $628 million from the same period in 2024.

Its net income jumped to $116 million from the previous $94 million.

Most importantly, the net customer retention rate jumped to 95%.

Wall Street analysts are hopeful that the company will report strong financial results on Wednesday.

The average estimate is that its revenue rose by 13.45% to $845 million, bringing its annual figure to $2.85 billion.

The Trade Desk has also become relatively undervalued, with its forward price-to-earnings ratio falling to 14.25, down from the five-year average of 64. Its forward PEG ratio has dropped to 0.48 from the previous 1.12.

The Rule-of-40 valuation multiple is also favourable. It has a forward revenue growth of 18% and an EBITDA margin of 22%, giving it a multiple of 40%.