TTD - Embedded Expectations Analysis - 2020 09 22
The Trade Desk, Inc. (TTD:USA) is currently trading at a historical high relative to UAFRS-based (Uniform) earnings, with a 105.2x Uniform P/E. Even at these levels, the market has bearish expectations for the firm, and management may be concerned about CTV spend sustainability, advertisers, and the potential of platform providersSpecifically, management may lack confidence in their ability to meet revenue growth guidance for Q3 and prevent negative brand affinity. In addition, they may have concerns about the sustainability of rising CTV advertising spend. Moreover, management may be exaggerating the advertising potential of Apple's app marketplace, and they may have concerns about Google's advertising business. Finally, they may lack confidence in their ability to address advertiser concerns about user-generated content and work with the advertising industry to drive consensus
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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