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Jeff Green, CEO of The Trade Desk.
Scott Mlyn | CNBC
Shares of a digital advertising company The Trade Bureau fell 19% on Friday morning, a day after the company reported third-quarter results and issued weak revenue guidance.
The company estimates fourth-quarter revenue at at least $580 million, but analysts expected $610 million, according to LSEG, formerly known as Refinitiv.
Trade Desk’s third-quarter earnings exceeded analyst expectations in both earnings and revenue. It posted adjusted earnings of 33 cents per share, beating the LSEG estimate of 29 cents. Revenue totaled $493 million, beating expectations of $487.04 million.
Analysts factored in the likelihood of lower ad spend in the December quarter. The company said it has noticed caution among advertisers in the automotive and entertainment industries, both of which have been hit by recent strikes.
“Despite leading the market as the largest independent demand platform (DSP), we believe TTD is not immune to a decline in ad spend,” Wolfe Research analysts said in a note to investors.
The Trade Desk is one of several companies that have cited weaker ad spending as a reason to be cautious or temper expectations for the fourth quarter. Meta, Pinterest And Snap all expressed concern about disrupted advertising spending due to the war between Israel and Hamas.
Analysts at Wolfe Research are concerned about the sustainability of The Trade Desk’s growth in connected TV, which is a major contributor to the company’s revenue.
“It is unclear whether CTV can sustain the high growth it has achieved over the medium term, which we believe poses a risk to TTD’s revenue growth, which is driven by both CTV’s broad strength and TTD’s market share gains within the CTV. channel,” Wolfe Research analysts wrote.
Analysts at Needham say the dip is a buying opportunity.
Needham analysts said in a note to investors that The Trade Desk generally over-delivers expectations and that the fourth-quarter fundamentals “do not threaten TTD’s strategic position, which is the winner, or its pricing power or weakness.”
“For investors who ‘missed’ TTD, you can buy the AdTech industry leader at a discount today,” they said.
— CNBC’s Jonathan Vanian and Michael Bloom contributed to this report.
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