More Thoughts on TTD and ROKU

Let’s not beat around the bush, TTD and ROKU have performed very poorly in this climate, each down ~50% from recent highs. This is more than double what the S&P 500 had lagged YTD, and far worse than many of the stocks discussed here. Barron’s posted an article a few days ago outlining the struggles that advertisers have faced (…), and which I have summarized in excerpts as follows:

“Across the media landscape, advertising is disappearing, one more casualty of the global economic shutdown. Advertisers are quickly slashing or pulling budgets, canceling or reducing campaigns, zapping billions in ad dollars from media income statements.”

“The reason is simple: Even the most prominent ad buyers lack reasons, and often the means, to buy ads. Global travel is on hold; for airlines, hoteliers, cruise lines, casino operators, and car-rental firms, there are no products to promote. With auto factories shut, there is little need to push cars. With movie theaters closed, there are no film trailers.”

“IAB surveyed nearly 400 ad buyers about the state of the industry, and the results are grim. Nearly three-quarters of those surveyed say the current ad downturn will be worse than the financial crisis in 2008. About a quarter of those surveyed by IAB have pulled all of their advertising through the second quarter.”

Yet, despite the article’s bear undertones, I remain long TTD and ROKU for what was the final paragraph of this article:

“This will be a defining moment in how consumers spend their time with media, and what technologies they use,” says eMarketer analyst Jasmine Enberg. “And some of those changes will be long-lasting.”

I believe the current climate will serve as an even greater catalyst for the “once in a lifetime” shift that TTD CEO Jeff Green has been talking about all these years. Major studios are releasing once-planned theatrical films straight onto their OTT platforms. The lack of sports, long the final hook of traditional cable, is giving people even more reason to cancel those expensive cable packages, especially in times of economic downturn. HBO has made 500 hours of classic content available for free in attempts to lure more people in. Hollywood is shut down for months, yet social media influencers can continue creating their incredibly cheap at-home content for bigger audiences than ever before.

Yes, things stink right now, but when the tide turns there will be loads of advertising space ready to be had, along with a race to grab it when all these companies ramp back up their campaigns. I do not mind some short term pain while these “long lasting” roots take hold even further. With share prices falling so drastically, I can easily see a double in the next two years for both TTD and ROKU from their current positions.



The correction 15 months ago saw TTD at 110. What a buy. Almost tripled over 300 13 months later. No wonder its on Berts short list of rebound stocks. Advertising being cyclical, and as you mentioned the trend it is exploiting, IF the economy rebounds anytime before the 4th of July, the tailwinds of pent up demand, Christmas season, election, etc. should catapult TTD.