Shares of The Trade Desk (TTD) tumbled 12% in a single session after investors reacted negatively to the newly announced advertising partnership between Netflix (NFLX) and Amazon (AMZN). Adding to the pressure, Morgan Stanley’s four-star-rated analyst Matthew Cost downgraded TTD from Buy to Hold and cut his price target from $80 to $50. The downgrade adds to what has already been a challenging year for the company, with TTD stock down about 60% year-to-date.
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For context, The Trade Desk operates a demand-side platform (DSP) that helps advertisers buy and manage digital ads across video, display, audio, and connected TV. The recent deal between Netflix and Amazon allows marketers to buy ad space on Netflix through Amazon’s demand-side platform (DSP), putting it in direct competition with The Trade Desk.
Morgan Stanley Turns Cautious on Trade Desk
Cost cut his rating on Trade Desk, raising concerns about weakness in both its connected-TV and online ad businesses. He said that trends in the company’s core connected-TV business point to “mounting headwinds” heading into 2025. Cost further admitted that he had overestimated the company’s ability to maintain growth, pointing to ongoing execution challenges, softness in the open web ad market, and rising competition in connected TV.
Moreover, Morgan Stanley’s research indicated that Trade Desk charges advertisers roughly double the fees of rival platforms, sparking growing resistance from clients. At the same time, Amazon’s ad platform is gaining traction, posing a serious threat to Trade Desk’s market position.
While Cost didn’t turn fully bearish, he cautioned that another downgrade could come if trends don’t improve. Still, with the stock already down sharply and expectations low, he sees limited downside from here. He added that he’ll be watching closely next quarter for any signs of a turnaround.
Is Trade Desk a Good Stock to Buy?
The Trade Desk’s stock has a consensus Strong Buy rating among 28 Wall Street analysts. That rating is based on 14 Buys, 12 Holds, and two Sells assigned in the last three months. The average TTD price target of $72.63 implies a 57.4% upside from current levels.
