TTD - Embedded Expectations Analysis - 2020 04 02
ï€ The Trade Desk, Inc. (TTD:USA) is currently trading at a 44.4x UAFRS-based (Uniform) P/E, which is above peer averages. At these levels, the market has bearish expectations for the firm, but management is confident about EBITDA performance, market trends, and the execution of strategiesï€ Specifically, management is confident that they have consistently outperformed EBITDA expectations and about the added contextual targeting capability in CTV. In addition, they are confident about recent regulation not giving a large advantage to walled gardens and that the objective and more transparent companies who manage to gain scale will be the dominant force of the new advertising market. Finally, they are confident about their execution strategy after gaining the loyalty of customers and in their decision to spend more to get more loyalty from their customers
The Trade Desk is a technology company for buyers of advertising. Through the company's self-service, cloud-based platform, ad buyers can create, manage, and optimize data-driven digital advertising campaigns across ad formats, including display, video, audio, native and social, on a multitude of devices, such as computers, mobile devices, and connected TV. The company's platform's integrations with data, inventory, and publisher partners provides ad buyers reach and decisioning capabilities, and its enterprise application programming interfaces enable its customers to develop on top of the platform.
In 2009, just as the dust was settling from the last major equity and credit market crises, we launched a boutique research firm with the intention of breaking Wall Street’s biases and broken incentives:
- GAAP and IFRS have failed to provide rules for reliable financial statement reporting
- Stock analyst recommendations are not grounded in disciplined financial analysis
- Credit agencies have been set up to grossly fail in their responsibilities to investors and the public markets
- Utter lack of willingness of major research firms to employ the the most advanced forensic analysis available
We sought to provide investors and company analysts with a source of information that changed all that.
Many years later, our business model remains because little has changed on Wall Street.
- Corporate credit ratings remain years behind the fundamental underpinnings of company performance
- Stock analysts continue to make recommendations with deeply inherent biases
- Research firms have failed to break down the walls between credit, equity, and macroeconomic research
- The governing accounting bodies have created more leeway for mis-estimates and mis-classifications as financials have become unwieldy and overwhelming
The integrity of Valens Research is founded in our disciplined processes and analytics. No “star” analysts. No corporate advisory relationships. No-nonsense opinions and recommendations.
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