Trade Desk's Growth Slowdown Confirms Bearish Risks, Testing Resilience Amid Competition

What happened

The Trade Desk's revenue growth has slowed recently, with management guiding for even weaker performance in Q4, as reported in a Motley Fool article. This deceleration aligns with the DeepValue report's bear scenario, driven by Amazon's aggressive DSP competition, which undercuts fees and secures exclusive CTV inventory deals. Despite management's efforts, including migrating clients to the AI-driven Kokai platform and a sales reorganization, these headwinds have contributed to a 70% stock decline in 2025 and shattered the premium multiple once attached to consistent growth. Market sentiment now frames TTD as a fallen leader, with investors questioning if mid-teens growth is sustainable or if further erosion toward single digits is imminent. The situation highlights a critical juncture where TTD must prove its initiatives can offset competitive pressures or risk permanent impairment.

Implication

The confirmed slowdown increases the probability of the bear scenario, where revenue growth could slip to 10-12% and EBITDA margins compress toward the mid-30s, eroding earnings power and justifying further multiple compression. Amazon's low-fee DSP and exclusive CTV partnerships pose a direct threat to TTD's market share, potentially forcing pricing concessions and undermining its network effects. However, TTD's strong cash flow, net cash balance, and over 95% customer retention provide some downside buffer, supporting buybacks and operational flexibility. Key near-term catalysts include Q4 earnings results versus guidance and concrete metrics on Kokai adoption, which will indicate if performance improvements can drive reacceleration. Investors must monitor these closely, with exposure reductions warranted if growth trends below low-teens or competitive pressures intensify without offsetting gains.

Thesis delta

The news reinforces the bearish risks outlined in the DeepValue report, shifting the weight toward the downside scenario without invalidating the potential buy thesis. Previously, a base case of mid-teens growth was plausible, but the guidance for slower Q4 growth makes sustained deceleration more immediate, lowering conviction in a near-term rebound. This necessitates tighter scrutiny of quarterly results and competitive dynamics, with the thesis now hinging more critically on Kokai's success and Amazon's impact over the next 6-12 months.