TTD - Where to next?

Reading both this board and NPI I notice a dichotomy of views between some wanting to stay with their position and those wanting to take money off the table based on valuation and possibly risk.

I don’t have the answer but there are a couple of Seeking Alpha articles that could be interesting for you to help formulate thinking on where to next.

https://seekingalpha.com/article/4175279-trade-desk-high-gro…
https://seekingalpha.com/article/4173610-shu-portfolio-trade…
https://seekingalpha.com/article/4173393-trade-desk-wow-quar…

So ok there was a massive one day leap with further consolidation post the results that must have partially benefited from a short squeeze effect however leaving aside the obvious tail winds of advertising moving from off-line to online, there were a number of points to me that I thought were simple and compelling considerations.

  1. Despite the recent leap it actually isn’t so stretched in its valuation given this is a profitable and fast growing company. They have a P/E of 65 and have grown revenues by a 90% CAGR over the last 3 years and are adding it to the bottom line now (nearly 100% growth on EPS this latest Q) and they have issued increased guidance which they have either beaten on top or bottom line or both every Q.
  2. It is really targeting world wide growth beyond US which is growing at twice the rate of US with a later to the party digital advertising boom. I know this first hand having seen them set up shop and shift to large and first rate offices here in Singapore.
  3. They are entering and growing in China - something that Google, Amazon, Facebook and Whatsapp have all failed at. They are partnering with the absolute top players - Baidu and Ali Baba. If you want a China play and you don’t want to invest in China stocks but Amazon and Google and Facebook continue to be shut out, here’s your opportunity.
  4. They have emphatically stated that they are not facing the same risk as Facebook in terms of personal data and privacy. Andrew Luck will have to find some other really desperate reason to short this one.
  5. The leadership and CEO Jeff Green in particular strike me as impressive, visionary, good decision takers and worth investing behind.

Ant

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My napkin math says if they guided $430m they probably hit $450 for 2018.

50% growth would lead to $675m for full 2019.

What is a fair P/S for a profitable SaaS company of that revenue size growing at that rate in one of the largest TAMs in some of the biggest trends in a generation (programmatic ads, CTV)?

I am not sure what the answer is, but I was pretty sure it wasnt what the market valued them at 2 weeks ago.

If you give them a P/S of 8, which is less than most Saul/NPI stock favorites enjoy, then:

$3.4b mkt cap for 2018
$5.4b mkt cap for 2019

Their current market cap is $3.38b, which tells me they are fairly valued for this full years expectations built-in already.

At this time next year, i can easily see the stock 50% higher than it is today, at $120 if they keep executing. But whether they are flat for next 6 months, i have no idea.

Now - if they hit 60-70% growth in 1 or 2 of the next 4 Q’s, I think they easily garner a higher P/S as a result. So you just need to do the math and decide what you think they will do in terms of growth and assign your P/S accordingly as a target.

I sold a bit, after the fast runup, just to rebalance the port a bit. But they are a LTBH for me.

Dreamer

13 Likes

“Andrew Luck” should be focusing on his rehab. The hapless Colts need him back this season. I do hope Andrew Left rights a hit piece so that I can buy more. Thanks for your write up. But, I couldn’t resist.

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Like dozens of NFL QBs past and present, (including Brissett) a good offensive line would make him a superstar. Otherwise, the smart money stays in rehab.

Yeh sorry that’s what I meant. I thought it read a little weird.
Ant

Reading both this board and NPI I notice a dichotomy of views between some wanting to stay with their position and those wanting to take money off the table based on valuation and possibly risk.

MF doctrine says hold 3-5 years.
I believe that the great growth stocks are continually underestimated for long periods, allowing them the surprise for long periods.
Value Line bases their ratings in part on earnings surprises (because they keep happening for a while).

MF doctrine will also tell you that it is a few great stocks that will really make your portfolio significantly outperform over time (like their initial Amazon buy at a split adjusted $3.18).

MF says they have 15 selections that are up 1000% or more. Is this the next one?

All that said, I think their great picks revolved around consumers that flocked to a company’s product (Amazon, Apple, Netfilx, Priceline, Baidu, etc). This does not fit that mold.

Some people would say sell half and the the “house money” ride. Is that the worst possible compromise?

Good luck, choose wisely.

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I think their great picks revolved around consumers that flocked to a company’s product (Amazon, Apple, Netfilx, Priceline, Baidu, etc).
a key point, non business customers are motivated by more than profit or loss. Fad, fashion , follow the herd works better here.

If there was any such hundred bagger company in the early stages now I would probably be one of the last to figure it out. Facebook still nonsense to me . Though I was an early Amazon and Apple customer, still use them. Why I did not stick to the stocks is lost in the fog of memory but it was a mistake

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