Trade Desk's Optimistic Rebound Narrative Faces Structural Amazon Threats and Execution Hurdles

What happened

The Trade Desk's stock plummeted approximately 70% in 2025, driven by revenue growth decelerating from the mid-20s to mid-teens amid tariff uncertainty and intensified competition from Amazon's DSP, which has secured exclusive CTV inventory and undercut fees. A Seeking Alpha article now argues this slowdown is temporary and macro-driven, citing management's expectation of growth acceleration in 2026 and TTD's neutrality across CTV, audio, and retail media as durable advantages. However, the DeepValue report reveals deeper structural risks, including Amazon's aggressive 1–8% fee strategy and partnerships with Netflix and Roku, which could permanently erode TTD's CTV share and pricing power. While TTD's AI-driven Kokai platform and open-internet infrastructure like UID2 offer potential for ROAS improvements and ecosystem lock-in, execution missteps and high stock-based compensation dilute shareholder value. Ultimately, TTD's ability to reaccelerate growth hinges on proving Kokai's efficacy and defending against Amazon in the next 6–12 months, making current optimism contingent on unproven operational turnarounds.

Implication

The Seeking Alpha article's bullish take overlooks critical competitive and execution risks highlighted in the DeepValue report, necessitating a cautious approach: TTD's high valuation multiples (~35x EV/EBITDA) leave little margin of safety if revenue growth stalls near 10–12%, and investors should demand concrete evidence of Kokai-driven performance gains and CTV billings resilience. In the near term, monitor management's guidance for 2026 and any pricing concessions to agencies, as these will signal whether TTD can maintain its premium positioning against Amazon's fee pressure. Over the next 6–18 months, the base case of ~$50 fair value depends on TTD outgrowing global ad spend by several hundred basis points without margin erosion, while failure to do so could trigger further multiple compression toward the bear case of ~$28. Given the mixed sentiment and lack of hard asset coverage, position sizing should be modest, with exits considered if quarterly growth dips below low-teens or operating cash flow turns negative.

Thesis delta

The new article reinforces the existing 'potential buy' thesis by emphasizing temporary macro headwinds and management's growth expectations, but it does not materially shift the core investment case from the DeepValue report. The thesis remains that TTD's valuation discounts severe Amazon-driven risks, and any upside requires proven reacceleration above 18% with stable margins, making the delta a slight tilt toward optimism if 2026 targets are hit. However, without actionable data on Kokai adoption or competitive share gains, the fundamental risks of structural slowdown and fee compression persist unchanged.