It isn’t often that I post a question without any thoughts of my own, but I’m interested in what folks think about this. For those of you who don’t follow TTD, you can likely just pass this post/thread to save time. For those who do follow or own TTD, I’m interested in your thoughts.
TTD did not give guidance for Q2. The following comments are what we have to consider.
Spend for the last week in March ended in a negative mid-teens year-over-year decline. In early April, the year-over-year decline in spend continued to increase. By mid-April, the year- over-year decline in spend stabilized. During the last 10 days in April we started to see more stabilization and then some improvement primarily driven by CTV as Jeff had described. Over that ten-day period, total spend improved to a negative high teens year-over-year decline.
OK, some thoughts…
March ended with 15% (mid-teens) decline and in early April that accelerated. I dunno, maybe 30%??? Then it stabilized (at whatever level you choose) in mid April. The last 10 days were still stabilizing with some increase back to around a 15% decline. So I’m guessing April was off by around 20% to 25%.
So 1/3 of their quarter was down pretty significantly. Obviously, we don’t know what May and June will bring. But any educated guesses or additional thoughts are appreciated.
We also know from the call that what hurt late March and April was programmatic flexibility. It is very easy to turn on and off. Will companies be turning on significantly in May and June. We also know CTV spend is likely to be a pretty big increase, but that is only a portion of the pie.
So, for those who follow TTD, what say you? How did you read this info? What were you able to glean from it? Certainly the market shrugged it off completely. What sales slowdown? The market has bid up TTD very quickly since these comments were made.
All of that said, TTD will trade on their Q3 guidance more so than Q2 results. And for Q3, everyone save Nostradamus is still in the complete dark.
I was wondering if the Facebook boycott might result in those ad dollars moving into the non-walled-garden properties that TTD deals with, or if those boycotting FB would just be content to pull back their spending until they have better visibility on the economic landscape moving forward. If the former, this could provide a nice upside surprise revenue-wise.
I say that I am excited that I kept my full position and even added to it on the way down on March 16th (2) and March 18th. I also say that I am extremely apprehensive about the recent acceleration that has been occurring between earnings reports and in the midst of Covid Punch #1a and Covid Punch #1b. Like you, I have been searching and contemplating explanations for what appears on the surface to be irrational price action.
“How did you read this info?”
Skeptically, because I am having a hard time rationalizing it and at the end of the day, most of us believe that the market is a rational, forward-looking market.
“What were you able to glean from it?”
a.) There must be asymmetric information in the marketplace resulting in what appears to be irrational pricing. b.) Perhaps big brand ad buys have navigated/migrated to the CTV domain faster and in larger ad spend amounts than was previously anticipated due to negative externalities of Covid. c.) In these interesting times, perhaps the ad exchange platform is providing far more value and benefit as the required efficiency of the ad spend dollar becomes more precious and thereby ad targeting increases the efficiency of each ad spend dollar. d.) Perhaps the market realizes that this will be the first ever true Programmatic Ad Election Season of our time combined with the fact that political ad spend may be, under these current social/physical distancing measures, be the best way to get your message out there this time around since the standard “whistle stop”, “pressing the flesh” and “baby kissing” strategies just aren’t going to rule the day.
Here is an article that probably has a few better and smarter ideas:
I agree election spending will again be through the roof this year, especially since it will presumably be less money spent on in-person events.
Their TikTok partnership could be huge. For those unaware, it’s a new video based social media platform with primarily younger users, especially in Asia, but growing tremendously in the US especially during the pandemic.
I like TTD and follow it. I sold it in March with the assumption that ad-spend would take a big hit as large companies pulled back on their advertising budgets.
The sell decision was a mistake in isolation, as the stock very much did not do what I expected. However, I bought DDOG with proceeds, so that didn’t work out too badly.
I think TTD is a pretty dangerous stock to own at present. The street is pricing in growth acceleration on Covid-19. It could happen, but I remain stuck in my original thinking — spend has to decline in aggregate and while TTD will may take share, they are really unlikely to see growth acceleration.
I will re-evaluate after earnings and see what they say about the current situation and outlook, then calibrate in management’s tendency toward optimism, before deciding about the future.
I could be completely wrong, but this is why I am not in this stock right now.
So, for those who follow TTD, what say you? How did you read this info? What were you able to glean from it? Certainly the market shrugged it off completely. What sales slowdown? The market has bid up TTD very quickly since these comments were made.
My first reaction was to sell out of TTD but I refrained while I considered what to do with the proceeds. And TTD kept going like the energizer bunny.
So I decided to hang on for the ride. I think TTD will slow down abit in Q2 and Q3 but business will get back on track. Now many would argue that under these circumstances its better to switch to a faster moving stock
First TTD is moving pretty fast enough for me at this time
2nd I have large short and long term cap gain taxes to pay if I sell.
3rd Some of those faster moving stocks may well have gotten ahead of themselves . Buying them now runs the risk of a strong correction, particularly in view of accelerating infection rates.
4th My conviction in TTD prospects has been strengthened because I believe advertising will come back strongly and TTD is by far the best in the business.I think the quarterly conference simply reflected th uncertainty of the near future.I anticipate strong revenue growth in an expanding market later this year and in years to come. TTD , like NVDIA and SHOP and some of the older companies like Amazon and Apple have such a strong franchise and a grip on the market they are not likely to be dislodged even after the current SaaS favorites may have grown to saturation. And investors seem to like them all enough to keep pushing up the price. That could continue for quite a while.
So I intend to hold on to TTD for the forseeable future.
Whilst the election will help them, the loss of the Olympics will leave a hole in TTD’s revenues.
I would associate the recent leg up as a result of the problems that are besetting Facebook and ad spend being potentially redirected towards TTD and/or the possibility exists that FB will remove the walls around its walled garden to advertising.
Also keep an eye on what’s going on with eBay’s ad listing transaction that is reinforcing the valuations surrounding advertising.
I would associate the recent leg up as a result of the problems that are besetting Facebook and ad spend being potentially redirected towards TTD and/or the possibility exists that FB will remove the walls around its walled garden to advertising.
Since the FB issues began about a week ago or a bit more, TTD has increased about 10%. So that may be a boost, but doesn’t explain the market’s reaction to earnings.
Also keep an eye on what’s going on with eBay’s ad listing transaction that is reinforcing the valuations surrounding advertising.
Would you care to expound on this a bit further?
Also, thanks to those who’ve provided thoughts thus far. Much appreciated.
Yeh further back beyond the recent 10% then clearly the massive stay at home increase in eyeball consumption of digital TV, gaming and eCommerce has elevated the switch to digital advertising away from physical advertising - benefitting TTD most likely.
eBay’s sale of its listing business to private equity is a crystalisation event that defines the value of advertising when historically advertising has been hard to value. That should help support valuations of everything in that space from Google to TTD. That’s an hypothesis tho.
As discussed in an alternative forum; another reason why this continued TTD price appreciation is of interest is that it is occurring in an environment where most recently the IDFA, basically the unique identifier used in target marketing, was revised in the most recent Apple iOS, making it more difficult to target and track users. So, if this does impact TTD, will advertisers be willing to spend as much for an ad impression if that impression is no longer as uniquely targeted as it once was.
From a recent search: “Apple is expanding privacy protections in iOS 14 with a tweak to IDFA handling that makes it much more difficult for advertisers to track users. The feature concerns Identifier for Advertisers (IDFA), a random device identifier tag that Apple assigns to a user’s device.Jun 24, 2020”