The Trade Desk stock price has imploded: will it plunge to $15?

The Trade Desk stock price remains in a freefall and is hovering near its lowest level since April 202o. It has become one of the worst-performing companies in the S&P 500 Index as it tumbled by nearly 85% from its highest point last year. As a result, its market capitalization has dropped from nearly $80 billion to $9.7 billion.

The Trade Desk is facing major headwinds 

The TTD stock price has plunged this year, a trend that has continued this month as some of the biggest clients announced reviews. 

In a recent report, AdAge said that Publicis had stopped recommending the company to clients. This happened after a third-party consultant found that The Trade Desk violated its service agreement by improperly comparing their DSP fee to other fees charged and automatically opting Publicis clients for features without authorization.

That report has pushed other companies to offer similar audits. The most recent one was Omnicom, which is hiring a third-party consultant to do a similar review. Analysts expect the company to hire one of the Big 4 audit companies to conduct the audit. 

The risk is that more advertising agencies like WPP and Dentsu may decide to do the same this year, putting millions of dollars in annual revenue at risk.

At the same time, analysts note that some of its biggest businesses are facing major headwinds that may affect its revenue growth this year. The most notable ones are the CPG and the automotive sectors, which may face headwinds as the Iran war continues.

TTD issued soft revenue guidance 

The most recent results showed that The Trade Desk’s business continued slowing down in the fourth quarter. It noted that its revenue rose by 14% in the fourth quarter to over $847 million. While this growth is still good, it was lower than the previous 22% increase.

The Trade Desk’s annual revenue rose by 18% to over $2.8 billion, lower than the previous annual growth rate of 26%.

The net income rose to $187 million, while its net income margin dropped to 22%. Additionally, the company forward guidance of the first quarter results was softer than expected.

The company now expects that its revenue will be $678 million, representing a 10% annual growth rate. Also, the estimate among analysts is that the earnings per share will come in at 32 cents from the previous 33 cents. 

Analysts believe that the annual revenue will come in at $3.26 billion, up by 12.71% YoY. The real revenue growth will be weaker than expected because of the ongoing headwinds.

The Trade Desk stock price technical analysis 

TTD stock chart | Source: TradingView 

The weekly chart shows that the TTD stock price has slumped in the past few months, moving from a high of $141 to the current $22.34. It recently crashed below the important support level at $38.73, its lowest level in July 2022.

The stock remains below all moving averages and the Supertrend indicator. Most oscillators, including popular names like the Relative Strength Index (RSI) and the MACD have continued falling.

Therefore, the most likely scenario is where the stock continues falling, potentially to the next key support level at $15. The bearish outlook will become invalid if it moves above the important resistance level at $38.