TRADE DESK, INC. (TTD): what the price requires
At today's price, TRADE DESK, INC. (TTD) is priced for today's economics sustained for ~11.1 years. boothcheck doesn't publish a fair value or a price target; it shows what the price assumes, so you can judge whether that bar is too high.
Generated: 2026-07-14 · Exported: 2026-07-16 · Source: https://boothcheck.com/report/TTD
Headline
| Field | Value |
|---|---|
| Ticker | TTD |
| Company | TRADE DESK, INC. |
| Sector / Industry | Technology / Software |
| Current price | $19.77/sh |
What The Price Requires (Inversion)
The assumption today's price embeds, recovered by inverting the valuation.
| Field | Value |
|---|---|
| Inversion basis | whole-company |
| Operating margin needed | 8.1% |
| Operating margin today | 14.6% |
| Margin compression implied | -6.5pp |
| Must persist for | 11.1y |
| Multiple paid | 22x operating income |
The operating-margin requirement is derived from the framework's value band at year 5, a separately labeled basis from the headline growth/duration solve.
Solve inputs: computed at a 13.3% cost of capital; growth searched up to the 25% self-funding ceiling; each 1pp moves the implied horizon ~2.1 years.
Reconcile: at the x-ray's 9.3% required return this reads ~20.2%/yr; the models below use their own rates.
How unusual the bet is: elevated
| Reference | Value |
|---|---|
| vs own history | -0.46σ |
| cohort percentile (of 177 peers) | 40 |
| sustained it ~10 years at this level | 15% |
| implied end-window share | 0% |
Valuation X-Ray
The price is justified by relative-multiple and growth-DCF; asset-based/earnings-power land below the price.
How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.
| Family | Median price/FV | Models | Reads |
|---|---|---|---|
| Asset | 1.96x | 5 | expensive |
| Earnings | 2.05x | 5 | expensive |
| Relative | 0.57x | 5 | justifies |
| Growth | 0.55x | 3 | justifies |
Families that justify the price: Relative, Growth Families that call it expensive: Asset, Earnings
The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 8.5%); the inversion above states its own rate.
Per-Model Detail (n=18)
| Model | Family | FV | Price/FV | Applicable | Methodology |
|---|---|---|---|---|---|
| DCF Perpetual Growth | Growth | $74.76 | 0.26x | yes | FCF base $1.1B, growth 16% (input: historical growth), terminal g 4.0%, WACC 8.5%, 6yr projection |
| DCF Exit Multiple | Growth | $35.75 | 0.55x | yes | Exit EV/EBITDA: 12.0x / 14.0x / 16.0x (bear / base = today's held flat / bull), 6yr |
| Relative Valuation | Relative | $35.59 | 0.56x | yes | P/E 35x (static sector reference · 2026-04), scenarios: 28.8x / 35.0x / 41.2x (bear / base = reference held flat / bull), EV/EBITDA 25x |
| Simple DDM | Growth | — | — | no | — |
| Two-Stage DDM | Growth | — | — | no | — |
| Simple Excess Return | Asset | $9.81 | 2.01x | yes | BV/sh $5.14, ROE (TTM) 17.6%, ke 9.3% |
| Two-Stage Excess Return | Asset | $13.37 | 1.48x | yes | 5yr excess ROE then converge to ke=9.3% |
| Discounted Future Market Cap | Growth | $19.81 | 1.00x | yes | Rev $3.0B, growth 16% (input: historical growth; tapered), Terminal P/S: 2.6x / 3.2x / 3.7x (bear / base = today's held flat / bull, cap 12x) |
| Peter Lynch Fair Value | Relative | $10.56 | 1.87x | yes | EPS $0.88, growth 4% (input: historical EPS growth), PEG=5.71 (Overvalued) |
| Margin Trajectory | Growth | — | — | no | — |
| Earnings Power Value | Earnings | $5.72 | 3.46x | yes | Normalized EBIT (5y avg op income, one-time charges added back) $0.30B × (1−40%) / WACC 8.5% → EPV (no growth) |
| Residual Income | Asset | $13.35 | 1.48x | yes | BV $5.14 + 5yr PV of (ROE (TTM) 17.6% − Kₑ 9.3%) × BV; BV grows 8.8%/yr |
| Graham Number | Asset | $10.09 | 1.96x | yes | √(22.5 × EPS $0.88 × BVPS $5.14) — Graham's conservative floor |
| EV/EBITDA Relative | Relative | $34.42 | 0.57x | yes | EBITDA $0.63B × sector EV/EBITDA 25.0x |
| FCF Yield | Earnings | $20.34 | 0.97x | yes | FCF $842.5M / Kₑ 9.3% — zero-growth perpetuity |
| SBC-Adj FCF Yield | Earnings | $9.65 | 2.05x | yes | SBC-adj FCF $0.37B (FCF $0.84B − SBC $0.47B) capitalized at Kₑ |
| Ben Graham Formula | Earnings | $11.90 | 1.66x | yes | EPS $0.88 × (8.5 + 2×3.8%) × (4.4 / 5.3%) |
| ROIC-Justified P/B | Asset | $1.30 | 15.20x | yes | BV $5.14 × (ROIC 2.1% / WACC 8.5%) |
| P/Sales Sector | Relative | $49.81 | 0.40x | yes | Revenue $2.97B × sector P/S 8.0x |
| PEG Fair Value | Relative | $5.04 | 3.92x | yes | EPS $0.88 × (PEG 1.5 × growth 3.8% (input: historical EPS growth)) → PE 5.7x |
| Earnings Yield | Earnings | $9.51 | 2.08x | yes | EPS $0.88 / required return 9.3% (Rf 4.3% + ERP 5.0%) |
| Funds From Operations Multiple | Relative | — | — | no | — |
| Clinical Phase NPV | Growth | — | — | no | — |
| Merton | Asset | — | — | no | — |
| V5 Mechanical | — | — | — | no | — |
Solvency
| Field | Value |
|---|---|
| Net cash | $1.4b |
| Net debt / NOPAT (after-tax) | -6.95x (net cash) |
| Net debt / operating income (pre-tax) | -3.52x (net cash) |
| Interest coverage | 264.0x |
| Share count CAGR (buyback) | -0.4% |
| Burning cash | no |
Bullet Takeaways
- The Trade Desk is the largest independent demand-side platform, where ad buyers run programmatic campaigns, and its structural pitch is neutrality: the FY2025 10-K says it avoids "the conflicts of interest of our competitors who serve both the buy side and sell side" (accession 0001671933-26-000014).
- The defining event of 2026 is a repricing: the stock fell more than 50 percent in the first half on decelerating growth, a Q2 guide below expectations, executive turnover, and a public dispute with agency Publicis over its Kokai platform.
- The core risk to watch is competitive: ad dollars are migrating into walled gardens like Amazon Ads and retail media, and management cited weaker CPG and auto spend plus competition from Amazon and Google in guiding Q2 revenue to at least $750 million.
Bull Case
Start with the bear's own headline and check whether the data supports it. The story is that The Trade Desk is losing to Amazon and Google and that growth is broken. Yet the FY2025 10-K reports revenue up 18 percent for the year to income from operations of $589 million at a 20 percent operating margin (accession 0001671933-26-000014), and the trailing figures show a business still generating $840 million of free cash flow at 195 percent conversion of net income, with a Piotroski score of 8 out of 9. This is not a company in operational collapse; it is a fast-growing, cash-rich platform whose stock price fell much faster than its fundamentals. The neutrality argument is the durable one: because The Trade Desk sells only to buyers, it can credibly optimize for the advertiser against inventory owners, which the 10-K frames as avoiding the conflicts of competitors who "serve both the buy side and sell side". Amazon and Google sell the ad space and the tools to buy it; The Trade Desk does not own the inventory, so its incentives point one way.
The secular tailwind is connected TV, and it is real. The 10-K describes accelerating consumer demand "to watch what they want, when they want and where they want" and argues this "increased demand for CTV will bring about new opportunities for content owners and advertisers to connect with consumers, including through ad-supported subscription models" (accession 0001671933-26-000014). As streaming services open ad tiers, the dollars that used to buy linear TV need a programmatic pipe to the open internet, and the largest independent DSP is a natural beneficiary. The Trade Desk is also building the plumbing that reduces its dependence on any single walled garden: Unified ID 2.0 as a cookie alternative, and transparency tools like OpenSincera across 400,000 publishers and OpenAds to clean up the auction (accession 0001671933-26-000014).
Then there is what the repricing did to the valuation. After a 50-plus percent drop, the stock trades at about 21 times trailing earnings against a software-sector median of 35, and roughly 14 times EBITDA against a median of 25, cheaper than the sector on a company still growing double digits with 20 percent operating margins and no meaningful debt. Management has been buying back stock and the share count is falling. The bull case is not that the competitive threats are imaginary; they are real. It is that the market has repriced a durable, cash-generative, category-leading platform to a multiple below the sector average, and that if CTV growth reaccelerates and the Kokai transition stabilizes, the gap between a 15-percent grower and a 21-times multiple closes in the bull's favor.
Bear Case
The moat that is eroding is the open internet itself, and that is the existential problem no amount of neutrality solves. The Trade Desk's value proposition depends on advertising dollars flowing through the open web, where an independent buying platform can add value; but in 2026 those dollars are migrating into walled gardens, Amazon Ads, Walmart Connect, and other retail media networks that own both the audience data and the inventory and sell the buying tools inside their own gates. The 10-K acknowledges the exposure directly, warning that competitors who "develop, market or resell competitive high-value products or services" or form strategic alliances could mean "our ability to compete effectively could be significantly compromised" (accession 0001671933-25-000062). When the buyer of ads can go straight to Amazon's first-party purchase data, a neutral DSP optimizing across the open web is competing against a structural advantage it cannot replicate.
The execution stumbles are compounding the secular pressure, and they are self-inflicted. The rollout of Kokai, the AI-driven platform the whole growth story leans on, drew scrutiny over unwanted campaign setting changes, and agency giant Publicis reportedly stopped recommending it, a serious signal when agencies route client budgets. Leadership has churned at the worst moment: the Chief Revenue Officer was asked to leave after seven months, the kind of disarray that unsettles enterprise customers mid-transition. The financial cracks followed: Q1 2026 revenue grew only 11.8 percent, decelerating sharply from the high-20s pace of prior years, and management guided Q2 to at least $750 million, below the roughly $771 million analysts expected, citing macro weakness in CPG and auto plus competition from Amazon and Google. Adjusted EBITDA margin compressed to about 30 percent from 34 percent a year earlier as platform and AI spending rose.
The price now sits in a genuinely awkward place. On the surface it looks cheap, 21 times earnings against a 35 sector median, but the inversion says the market is still paying about 22 times operating income for growth held near the self-funding ceiling for roughly 11 years, a persistence only about 15 percent of comparable fast-growers have achieved. That is an elevated assumption for a company whose growth just halved and whose largest agency partner is publicly distancing itself. The earnings quality also flatters: the balance-sheet risk read sits in the grey zone, and the most recent quarter's net income fell year over year on below-the-line items even as operating income rose. Analysts have turned: Arete cut the stock to sell with an $11.60 target, and Rothschild flagged roughly 51 percent downside on share-loss fears. The bear case is that a cheap multiple on a decelerating, share-losing platform is not a bargain; it is a value trap where the E in the P/E keeps getting revised down.
Valuation
The stock looks inexpensive on the surface and the surface is misleading, so this section has to hold both readings at once. At $19.52 (July 2026), after a first-half decline of more than 50 percent, the trailing multiples sit below the sector: about 21 times earnings against a software-sector median of 35, and roughly 14 times EBITDA against 25. On those lenses, the relative-multiple and growth-DCF methods actually justify the price, which is why a value-minded buyer sees a category leader on sale. But the inversion tells a more demanding story: the market is still paying about 22 times operating income for growth held near the company's self-funding ceiling for roughly 11 years, and only about 15 percent of comparable fast-growers sustained that pace so long. That assumption reads as elevated, and it is elevated precisely because growth just decelerated to 11.8 percent from the mid-to-high-20s.
The method families disagree in the informative way. Relative-multiple and growth-DCF reach the price; the asset-based and earnings-power methods read it as roughly twice what they support, because The Trade Desk carries little book value and its GAAP earnings are modest relative to the market cap. Note the margin framing carefully: the price does not require margin expansion, the framework's value band implies a roughly 7.4 percent operating margin would justify it, against the 20.3 percent the company earns today, so this is a growth-and-durability bet, not a margin-recovery bet. The load-bearing question is therefore duration of growth, and duration is exactly what the competitive and execution news has thrown into doubt. One coherence note: the most recent quarter's net income fell year over year while operating income rose, a divergence driven by below-the-line items (taxes and non-operating lines), not by margin compression, so the operating trend is steadier than the net-income headline.
Solvency is not the issue and belongs in the close only as reassurance: The Trade Desk generated $840 million of trailing free cash flow at 195 percent conversion, holds no meaningful debt, and is buying back stock, so it can fund the Kokai transition and weather a soft ad market without financing risk. The concrete bet at this price is that growth stabilizes and reaccelerates off CTV and Kokai rather than continuing to decelerate as walled gardens take share; if it does, a double-digit grower at 21 times earnings is cheap, and the value families are right. If growth keeps sliding toward the low single digits some bears model for fiscal 2027, then the 21-times multiple is on earnings that are about to shrink, and the low headline multiple is a warning rather than a bargain. The valuation cannot be settled by the multiple alone; it turns entirely on whether the deceleration is a pause or a trend.
Catalysts
The Q1 2026 report on May 7 was the pivot point. Revenue of $688.9 million grew 11.8 percent year over year, slightly ahead on the top line, but adjusted EPS of $0.28 missed the $0.32 consensus on higher taxes and platform spending, and adjusted EBITDA margin compressed to about 30 percent from 34 percent a year earlier. The bigger blow was guidance: management pointed Q2 revenue to at least $750 million, below the roughly $771 million analysts modeled, citing macro softness in CPG and auto advertising and competitive pressure from Amazon and Google, and the stock fell more than 14 percent after hours. The next earnings report is the critical catalyst, the market needs to see whether the deceleration stabilizes near the guided range or continues.
The Kokai transition is the strategic swing factor. Kokai, the AI-driven platform the growth story depends on, has drawn scrutiny over unwanted campaign setting changes, and the public friction with Publicis, which reportedly stopped recommending the platform, put a spotlight on whether Kokai delivers reliable, transparent performance for the agencies that route budgets. Progress on Kokai adoption and any repair of the Publicis relationship would directly address the loudest bear concern; continued friction would deepen it. Leadership stability is a related watch item after the Chief Revenue Officer departed seven months into the role.
Analyst sentiment has turned sharply negative and is itself a catalyst variable. A string of downgrades hit through June, Arete moved to sell with an $11.60 target on share-loss concerns, and Rothschild flagged roughly 51 percent downside, leaving expectations low enough that any stabilization could move the stock. The structural threads to monitor are the pace of ad-dollar migration into walled gardens and retail media, the trajectory of connected-TV spend as streaming ad tiers scale, and continued buyback activity, which signals management's own read on the disconnect between the price and the cash the business generates.
Peer Cohorts (Per Segment, With Filing Citations)
Advertising technology platform (single segment) (reported)
- DV (DoubleVerify Holdings, Inc.)
- (no filing in the citation store)
- MGNI (MAGNITE, INC.)
- (no filing in the citation store)
- RAMP (LiveRamp Holdings, Inc.)
- (no filing in the citation store)
- APP (AppLovin Corp)
- (no filing in the citation store)
Methodology Note
- Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
- Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
- Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
- Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.
Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.
Sources
Motley Fool; TIKR · Q1 2026 earnings call · Motley Fool · Simply Wall St; Timothy Sykes · Barchart; Benzinga · TIKR; Q1 2026 results · Simply Wall St