The Trade Desk TTD stock has tumbled 39.8% following the release of its second-quarter 2025 earnings on Aug. 7. Revenues increased 19% year over year to $694 billion and beat the consensus mark by 1.4%. This came above the company’s revenue expectation of at least $682 million. Connected TV or CTV once again emerged as the fastest-growing channel, driven by expanding partnerships with major media players, such as Disney, NBCU, Netflix, Roku and Walmart. Kokai continues to deliver strong performance.\n\nOn the profitability front, adjusted EBITDA came in at $271 million compared with $242 million in the year-ago quarter. Adjusted EPS was 41 cents, missing estimates but up from 39 cents in the year-ago quarter, with free cash flow at $117 million.\n\nNonetheless, intense competition in the ad tech space amid increasing macroeconomic uncertainty are keeping investors on the sidelines. So, now the question arises whether investors should remain invested in TTD stock or book profits and exit. Let’s unpack the pros and cons and ascertain the best way forward.\n\nFactors Driving Growth for TTD\n\nIncreasing digital spending in CTV remains a key growth driver. CTV, along with retail media, accounted for much of the company’s growth, supported by The Trade Desk’s decision-based programmatic approach, which delivers better returns compared with insertion order or programmatic guaranteed buying. \n\nIn the second quarter, Video, which includes connected CTV, accounted for a high-40s percentage of its overall business and continues to increase its share of the mix in the quarter. Mobile contributed a mid-30s percentage share of total spend, while display made up a low double-digit share and audio comprised approximately 5%.\n\nApart from CTV, momentum in retail media, international expansion, the Kokai platform, and efforts to strengthen go-to-market capabilities are other tailwinds.\n\nMore than 70% of the clients are now using the company’s Kokai platform, with full client adoption expected to be completed by this year. Trade Desk highlighted that Samsung saw a 43% improvement in audience targeting efficiency for an omnichannel, while Cashrewards experienced a 73% improvement in cost per acquisition for campaigns in Asia. Adding Koa AI technology across the platform is expected to aid in attracting more clients.\n\nComplementing Kokai, OpenPath is simplifying the programmatic supply chain by allowing publishers to integrate directly with The Trade Desk’s platform. Sincera's acquisition is enhancing supply chain transparency through OpenSincera, which makes data available to the ecosystem for free. TTD is also upbeat about Deal Desk, which is currently in the beta stage. Deal Desk leverages AI forecasting to optimize deals and re-route underperforming deals to better open market and premium internet alternatives. Disney is already leveraging Deal Desk.\n\nThe Trade Desk Price, Consensus and EPS Surprise\n\nWhile North America accounted for 86% of advertising spend, TTD is steadily expanding its global footprint, driven by faster-growing international markets. This increasing global presence offers clients localized marketplace expertise across key regions. On the earnings call, management said international growth again outpaced North America.\n\nFor the third quarter of 2025, the company anticipates revenues of at least $717 million, representing 14% year-over-year growth. Excluding the benefit of U.S. political ad spend in the third quarter of 2024, the company projected year-over-year growth for the third quarter to be approximately 18%. Trade Desk projects adjusted EBITDA for the third quarter to be around $277 million.\n\nTTD Faces Several Headwinds\n\nMacroeconomic uncertainty is likely to weigh on advertising budgets. TTD remains cautious regarding the impact of the volatile macro backdrop, particularly on the large global brands. If macro headwinds worsen or persist into the second half of 2025, revenue growth may face further pressure due to reduced programmatic demand.\n\nThe intensely competitive nature of the digital advertising industry, dominated by industry giants like Alphabet GOOGL and Amazon AMZN, as well as other smaller players like Magnite MGNI, continues to put pressure on TTD’s market positioning. Walled gardens like Google and Amazon dominate this space as they control their inventory and first-party user data, allowing for highly targeted ad campaigns.\n\nWhile CTV remains a strong revenue driver, this market is also increasingly becoming competitive. Heavy reliance on CTV for growth is a concern, as any adverse impact on this segment could weigh heavily on the overall performance. Growing regulatory scrutiny around data privacy and evolving consumer data practices also threaten to disrupt the established audience-targeting methods.\n\nHigher expenses are likely to weigh on profitability. In the last reported quarter, total operating costs surged 17.8% year over year to $577.3 million. Expenses soared on account of continued investments in boosting platform capabilities, particularly platform operations. Higher costs can prove a drag on margins, especially if revenue growth does not keep pace.\n\nOverreliance on North America for revenues is another concern. Though TTD is focusing on geographic expansion, executing well across disparate markets can be complex and risky.\n\nGiven all these factors, analysts have kept their earnings unchanged for the current quarter.\n\nTTD Stock vs. Peers\n\nThe company has also underperformed its digital advertising peers, including Alphabet, Amazon and Magnite over the past month. TTD has lost 29.5% while Amazon and Magnite shares have declined 1.9% and 4.4%. GOOGL is up 10.7% over the same time frame.\n\nStretched Valuation for TTD\n\nTTD stock is also not so cheap, as its Value Style Score of F suggests a stretched valuation at this moment. The stock is trading at a premium, with a forward 12-month price/sales of 8.23X compared with the industry’s 5.46X.\n\nRetain TTD Stock for Now\n\nDespite the steep post-earnings slide, strong CTV growth, expanding Kokai adoption, and rising international traction support TTD’s long-term prospects. Innovations like Deal Desk and OpenPath position it well for sustained market share gains.\n\nHowever, macro uncertainty, intensifying competition, and a premium valuation limit near-term upside potential. Heavy reliance on CTV and rising costs add execution risks that could pressure margins if top-line growth slows.\n\nGiven the mix of solid fundamentals and near-term headwinds, investors holding TTD stock can retain it in their portfolios for now, but new investors would be better off waiting for a favorable entry point.\n\nAt present, TTD carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.\n\nThis article originally published on Zacks Investment Research (zacks.com).

TTD Stock Crashes Post Q2 Earnings: Stay Invested or Make an Exit?

The Trade Desk's stock dropped 39.8% after releasing its second-quarter 2025 earnings, which showed a 19% year-over-year revenue increase to $694 billion, exceeding expectations. Adjusted EBITDA rose to $271 million, and adjusted EPS reached 41 cents, slightly missing estimates. Growth in connected TV (CTV) and retail media, supported by the Kokai platform and OpenPath, remains strong, with over 70% of clients using Kokai and improvements in audience targeting and cost efficiency reported by clients like Samsung and Cashrewards. The company projects 14% year-over-year revenue growth for Q3 2025, with adjusted EBITDA around $277 million. However, macroeconomic uncertainty, intense competition from giants like Google and Amazon, rising operating costs, and a stretched valuation (forward P/S of 8.23X vs. industry average of 5.46X) are key headwinds. TTD underperformed peers, losing 29.5% versus Amazon and Magnite's declines of 1.9% and 4.4%. Analysts maintain a Hold rating (Zacks Rank #3), suggesting investors should retain the stock for now but new investors should wait for a better entry point.