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Why did TTD plummet?

3/28/2025 07:06pm

Aime

The deep research logic is organized as follows: 

Okay, let's tackle why TTD plummeted. First, I need to look at the references provided. The user is asking about the reasons behind the stock's drop. Let me start by checking the recent data.

Looking at Reference 1, TTD's pre-market change was -0.38% and post-market +2.38%. But the last price is $55.87 with a -2.43% change. That's a recent drop. Then, Reference 2 shows the percentage changes over the past two weeks. The stock had a -2.43% on 2025-03-28, which is the latest date. So, the recent decline is part of a pattern that includes both gains and losses.

Next, the legal issues. References 3, 6, 13, 14, 15, 16, 17, 18, 19, 20, 21, 22, 28, 29, 31, 32, 33, 34, 35 all mention class action lawsuits against TTD. The lawsuits allege that TTD made misleading statements about the Kokai rollout, which caused execution challenges and delayed revenue growth. These lawsuits were filed between March 2025 and March 28, 2025, with deadlines approaching in April. Legal actions can significantly impact investor confidence and stock price.

Then, the Q4 2024 earnings miss. Reference 7 mentions that TTD's Q4 revenue was $741 million, missing its own guidance of at least $756 million. This was the first time in 33 quarters they missed both revenue and EBITDA. The earnings report also led to a 26% stock drop post-earnings. Weak guidance for Q1 2025 (revenue of $575 million, implying 17% YoY growth) and EBITDA margin of 25% disappointed analysts. The company admitted that Kokai's rollout was slower than expected, which hurt their performance.

Analyst downgrades and institutional selling. Reference 5 mentions an upgrade to Buy by CFRA with a $97 target, but the stock is still down 47% YTD. However, other references (like 7) note that the stock has declined over 54% YTD, which is a significant drop. The lawsuits and earnings miss likely contributed to this decline, even with some upgrades.

Market conditions. References 10, 11, 12 discuss broader market volatility, with the S&P 500 and Nasdaq experiencing losses around the same period. However, TTD's drop is more severe, indicating company-specific issues rather than just market trends.

Putting it all together: The plummet is due to a combination of the Q4 earnings miss, delayed Kokai rollout affecting future growth, multiple class action lawsuits alleging securities fraud, and subsequent analyst concerns. The legal issues and earnings disappointment created a perfect storm, leading to investor panic and a sharp decline in stock price.

Why TTD Plummeted: Key Drivers of the Sharp Decline
The Trade Desk (TTD) stock has experienced significant volatility in 2025, driven by a combination of operational challenges, legal risks, and weak earnings performance. Below is a breakdown of the critical factors behind its recent decline:

1. Q4 2024 Earnings Miss and Guidance Weakness

Revenue Disappointment: TTD reported Q4 2024 revenue of $741 million, missing its own guidance of "at least $756 million" and falling short of consensus estimates of $759.05 million ¹². This marked the first time in 33 quarters that the company missed both revenue and EBITDA.
Guidance Concerns: Q1 2025 revenue guidance of $575 million (implying 17% YoY growth) and an EBITDA margin of 25% disappointed analysts, signaling slower growth than expected ¹.
Post-Earnings Reaction: The stock dropped 26% immediately after the report, with investors reacting to the delayed rollout of its AI forecasting tool, Kokai, which management admitted was "slower than anticipated" ¹³.

2. Class Action Lawsuits Alleging Securities Fraud

Multiple Litigations: At least 15 class action lawsuits have been filed against TTD between May 2024 and February 2025, alleging that the company misled investors about Kokai’s execution challenges and delayed rollout ⁴⁵.
Key Allegations: Plaintiffs claim TTD failed to disclose that Kokai’s rollout was hindered by self-inflicted technical issues, negatively impacting revenue growth and business operations ⁴⁵.
Deadline Impact: The lawsuits’ lead plaintiff deadlines (e.g., April 21, 2025) have heightened investor uncertainty, potentially delaying a recovery ⁴⁵.

3. Kokai Rollout Delays and Growth Concerns

Kokai’s Role: Kokai, TTD’s AI forecasting tool, was expected to drive growth by improving ad targeting efficiency. However, its delayed rollout (due to technical and client transition challenges) has slowed revenue momentum ⁴⁵.
Growth Projections: Analysts now project 15–20% revenue growth in 2025, the slowest rate in eight years (excluding pandemic periods), reflecting reduced confidence in Kokai’s near-term impact ²¹¹.

4. Broader Market and Sector Pressures

Tech Sector Volatility: The Nasdaq and S&P 500 faced headwinds in March 2025 due to tariff concerns and inflation fears, exacerbating TTD’s decline ²²²³.
Ad Tech Sentiment: Weakness in programmatic advertising spending and competition from platforms like Google and Meta further pressured TTD’s valuation ²⁵.

5. Analyst Revisions and Institutional Selling

Mixed Signals: While CFRA upgraded TTD to "Buy" with a $97 target (56% upside), the stock remains down 47% YTD, reflecting lingering skepticism ²¹.
Institutional Activity: Heavy selling by institutional investors and hedge funds contributed to the decline, with TTD’s stock trading at its lowest level since its IPO ¹²⁵.

Conclusion: TTD’s Path to Recovery

TTD’s plummet stems from a toxic mix of operational missteps, legal liabilities, and growth concerns. While the stock’s current valuation (trading at 45x 2026 EPS estimates) appears attractive to some analysts ²¹, near-term risks—especially from the class action lawsuits and Kokai’s delayed rollout—will likely dominate investor sentiment. A resolution of the lawsuits and clearer visibility on Kokai’s adoption could reignite investor confidence, but this remains speculative.

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TTD Trend

Source:

1. The Trade Desk (TTD) Stock Has 121.7% Upside Post-Decline. Should You Buy?