Seeking Alpha Upgrades Trade Desk Amid Valuation Plunge and Growth Deceleration

What happened

Seeking Alpha has upgraded Trade Desk to a 'generational buying opportunity,' citing its valuation at multiyear lows after a ~67% stock price decline from late 2024. This optimism is driven by Q3 adjusted EBITDA margin expansion to 43% and aggressive share buybacks, despite revenue growth slowing to 18% YoY and softer Q4 guidance due to ad spending headwinds. DeepValue's report confirms Trade Desk's strong fundamentals, with Q3 2025 revenue of $739.4 million and net income of $115.5 million, but notes a deceleration from historical 23-26% annual growth rates. However, the report highlights persistent risks, including macro-sensitive ad budgets, intense competition from walled gardens, and regulatory threats to data privacy and RTB mechanics. Ultimately, while valuations have improved, investor confidence depends on Trade Desk sustaining growth above mid-teens and navigating these structural challenges.

Implication

The upgrade underscores that Trade Desk's depressed price may offer value for long-term investors, but margin strength and buybacks alone are insufficient to offset growth deceleration. DeepValue's analysis indicates that sustaining high-teens revenue growth and stable margins is critical to justify a buy, yet macro and competitive pressures could erode this. Regulatory risks, particularly around privacy and UID2 adoption, remain a significant threat that the article underplays, potentially impacting the business model. Therefore, investors should prioritize monitoring quarterly performance against DeepValue's watch items, such as revenue trends and regulatory developments, before committing capital. A diversified approach is advisable, as Trade Desk's recovery hinges on executing in a challenging environment while managing dilution from stock-based compensation.

Thesis delta

The Seeking Alpha article introduces a more bullish near-term perspective based on valuation and margin improvements, but it largely ignores the deeper structural risks emphasized in the DeepValue report. This does not shift the core 'POSSIBLE BUY' thesis, which remains contingent on Trade Desk overcoming growth deceleration and regulatory hurdles, reinforcing the need for investor caution amidst the optimism.