Looking back 2 years, TTD’s revenues are moving in the same general trajectory. That is, about 30-40% annual growth, with earnings now seeming to grow a bit faster showing operating leverage. It’s clear that it had grown too fast given that they faced COVID headwinds but I kind of justified it as a reset on the valuation because of the accelerated shift to digital. Most of our companies experienced share price appreciation that outpaced revenue growth last year (except maybe ZM and PTON). So it’s not surprising to see a lot of them down a good amount.
A lot of this worry is just price anchoring though. Because of the calendar year, people look and see their portfolios down 20% instead of up 100% or more over last 18 months.
Yes, it’d be nice to be able to call a top and sell out just at the right time. An inordinate number of Twitter users seem to be able to do just that. For those that are smart enough to hold through 3 or 4 years of people saying that everything is grossly overvalued but figuring out that February or November or whatever was the right time to exit the growth stocks and move into the rebound plays, you’re a much better investor than I am. I’ll just stick to my plan of buying growth and letting the valuation fall wherever it ends up. Over my investing horizon I expect that sometimes I will be paying too much, other times I’ll be getting a great deal, but in the end growth will be the long term driver of share price appreciation.