The Trade Desk: Phoenix emerges

I was going to reply on the other thread, Saul (and friends), but figured I’d just start a new thread. I know @MajorFool20 mentioned TTD is his largest holding and I’m up to 8% in my port so I’m sure he/she can chime in, too.

My rationale for TTD was that in this macro environment, I was willing to be flexible with my investing criteria wishlist. Though TTD is certainly not hypergrowth (more on that below), it does earn full marks for many of the other criteria we espouse around here: TTD is an industry leader with recurring revenue, in an industry with multi-year tailwinds, with a Founder-CEO in Jeff Green who ain’t no newbie: he founded AdECN which he sold to MSFT, stayed two years, then left and started TTD.

TTD, as the premier demand-side digital ad platform, last reported earnings in mid- February. Margins are accelerating, and although the last two quarters growth of 31% and 24% doesn’t sound like our typical high end growth rates for the board, the key for me is that they are GAINING MARKET SHARE vs their competitors during this time period (competitors posting rather pedestrian single digit growth rates, or even a contraction citing ‘macro conditions’). They also have a RULE of 40: (growth rate + EBITDA margin) over 50 and recently announced a share buy back.

I’ve learned during the last two years that I can have many of the things we value as company characteristics, but it’s hard to have them all right now given the investing environment. My own personal strategy, too, likes to hold companies a little longer than is typical around here: I’ve felt a little whiplash as the hive-mind on the board has traded in-and-out of several companies with a short track record. TTD, for me, despite not being hypergrowth, is one to own for many of the characteristics we espouse to value if I look behind simple top-line growth and crucially, the growth they do have is coming at the expense of competitors. It’s premier position in an industry undergoing disruption that is likely going to play out over a decade or more (and certainly beyond a turn or two of the macro wheel) allows me to be prepared to hold this through the rest of any current macro headwind with a belief that when the tide turns, the Big Boys will see it similarly when money flows back in to our in-focus companies.


A couple of more things that makes me tactically bullish on TTD.

  1. DOJ filed a complaint against Google for being on both the buy side & sell side of the digital ad sale in January - here is a link to the DOJ website regarding the complaint - scroll down the website to download the complaint…

Although it would take years for this case to go to trial it is possible that Google will settle with the DOJ. If Google chooses to settle the company will probably have to pick one side of the fence to play on. If it chooses the sell side one would think that would really help TTD who plays on the buy side.

  1. Next year is a presidential election year in the United States - this will boost ad revenue across the board. Although tactical in nature and highly predictable it makes me thing TTD’s quarterly compares next year to this year will be quite favorable.

  2. Next year will be the first U.S. presidential election year where Netflix’s ad supported platform will be operating - this should be beneficial to TTD.

Frank - long TTD, long NFLX, see profile for all holdings


The Trade Desk uses AI to improve its business

Here is another reason, and it’s from June, 2018! As we read recent press releases from companies that are implementing AI solutions, it seems like The Trade Desk is (at least) one step ahead of everybody else.