SINGAPORE (Sept 10): If you are looking for the best-performing tech stock this year, don’t look at the usual suspects like Facebook, Amazon.com, Apple, Netflix and Google’s parent, Alphabet — the so-called FAANG names. Up over 211% this year, The Trade Desk sits at the crossroads of advertising and technology. In some ways, it is a competitor of Facebook, Google and Amazon. But more than that, this nemesis of old media — print newspapers, radio and TV — is helping transform the whole advertising landscape, including who sees ads, and where and when they see it.
The Trade Desk is a highly automated electronic marketplace where brand owners who want to place ads and publishers or website owners who are seeking ads make deals. Essentially, its algorithms help its agency clients purchase advertising programmatically, cutting out the human element. Moreover, it does not operate the arbitrage model that many ad exchanges do, like buying ad inventory and selling it to clients for more. Instead, it simply charges its clients a fee based on total ad spend.
Two years ago, The Trade Desk launched its IPO at US$18 a share. It was, at the time, barely making money and investors seemed lukewarm about its prospects, betting that internet giants such as Google, Facebook or Snap would beat anything that the upstart could do. Fast forward to today, even as Facebook and Google have seen their own ad revenue growth start to flatline, The Trade Desk has beaten profit forecasts quarter after quarter for two years now. The stock is currently trading at US$147 a share, or up over eightfold since its IPO. The Trade Desk has actually tripled since early May, just before it reported spectacular first quarter results. Jefferies analyst Brent Thill expects it to report US$68 million ($97 million) in profits this year, up 35% over last year.