Shares of The Trade Desk (TTD 0.09%) rose 63.3% in 2024, according to data from S&P Global Market Intelligence. That's a market-smashing success story even in a year where the S&P 500 (^GSPC 0.16%) market index increased by 23.4%.
The omnichannel advertising specialist shocked the Street with a steady stream of positive surprises in last year's earnings reports. The Trade Desk also released an ad-focused operating system for connected TV sets and formed several new partnerships in the digital advertising market.
How The Trade Desk stiff-armed an industry downturn
The digital ad sector started a deep downturn in 2022, as the inflation crisis undermined every marketing budget. Why spend big money on targeted ads when nobody is ready to buy your goods? Ad-based revenue streams dried up, driving stock prices lower across the adtech industry.
The Trade Desk never really got the memo about that downturn. The stock fell hard, setting investors up for a fantastic rebound later on, but the business didn't even slow down.
Facing tight budgets and difficult consumer spending trends, many ad buyers sought this company's cost-controlling expertise. The Trade Desk's full-year sales rose by 24% in 2023. The year-over-year growth rate accelerated to 27% across the first three quarters of 2024. Earnings took a dive in 2022, but came back strong the next year. Once again, The Trade Desk's bottom-line results soared higher than expected last year.
The new Ventura platform for connected TVs may not be a game changer when it becomes available in the second half of 2025. Consumers and device builders have tapped Roku as their favorite connected TV software provider, followed by Amazon as the distant runner-up and Alphabet's Google TV in a barely detectable third place. Stealing market share from these firmly established leaders -- who also happen to be important ad-network partners to The Trade Desk -- will be a difficult task.
Still, the mere attempt to earn a market slice could work in The Trade Desk's favor while negotiating ad-spot rates.
These pricey shares are still easy to love
The Trade Desk has a shareholder-friendly ability to deliver strong results in a weak economy. Its fiscal discipline and innovative advertising solutions should pay dividends in a healthier economy, too.
In other words, The Trade Desk's stock is rising for all the right reasons. The stock isn't cheap at 197 times trailing earnings and 114 times free cash flow, but it's hard to argue with the company's tremendous business growth before, during, and after the inflation panic.
