TTD - Embedded Expectations Analysis - 2021 06 21
The Trade Desk, Inc. (TTD:USA) currently trades well above corporate averages relative to UAFRS-based (Uniform) earnings, with an 88.2x Uniform P/E. At these levels, the market is pricing in bullish expectations for the firm, but management may have concerns about revenue growth, advertising industry leadership, and the potential of UID2Specifically, management may lack confidence in their ability to accelerate revenue growth, maintain operating cash flow generation, and gain additional spending from existing customers. In addition, they may be exaggerating the potential and current scale of UID2 and the ability of CTV to drive revenue growth. Furthermore, management may lack confidence in their ability to develop a CTV upfront market and continue leading the advertising industry through their partnerships and data integration capabilities. Moreover, they may have concerns about the effectiveness of ads without cookies and consent issues regarding the exchange of consumer data for free content on the Internet
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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