Jeff Green, CEO of The Trade Desk.
Scott Mullin | CNBC
Digital advertising company stocks trade desk Shares were down 19% Friday morning, a day after the company reported third-quarter results and issued a weak earnings outlook.
LSEG (formerly Refinitiv) said it estimates fourth-quarter sales of at least $580 million, while analysts were expecting $610 million.
The Trade Desk’s third-quarter results exceeded analysts’ expectations for both profit and sales. Adjusted earnings per share were 33 cents, beating LSEG’s estimate of 29 cents. Revenue was $493 million, exceeding expectations of $487.04 million.
Analysts say advertising spending could slow in the December quarter. The company said advertisers in the auto and entertainment industries, affected by recent strikes, are being cautious.
“Despite its market leadership as the largest independent demand-side platform (DSP), we believe TTD is not immune to weak ad spending,” Wolf Research analysts wrote in a note to investors. ” he said.
The Trade Desk is one of many companies citing weak ad spending as a reason to temper caution and expectations for the fourth quarter. Meta, pinterest and snap All expressed concern about the disruption to advertising spending due to the Israel-Hamas war.
Analysts at Wolfe Research are concerned about the sustainability of The Trade Desk’s growth in connected television, which is a major contributor to the company’s revenue.
“It is unclear whether CTV will be able to maintain the high growth it has achieved over the medium term and this, in our view, will result in TTD’s sales growth, which has been driven both by CTV’s broader strengths and TTD’s increasing share within CTV. “channel that poses risks to growth,” Wolf Research analysts wrote.
Needham analysts say the decline is a buying opportunity.
In a note to investors, Needham analysts wrote that The Trade Desk typically over-provides guidance, and that fourth-quarter fundamentals are “unlikely “It doesn’t threaten its position, its deep moat or its pricing power. We are buyers.” weakness. ”
“Investors who ‘missed out’ on TTD can buy the ad tech industry leader at a discount today,” they said.
—CNBC’s Jonathan Vanian and Michael Bloom contributed to this report.
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