Author Topic: TTD - The Trade Desk  (Read 8702 times)

glorysk87

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Re: TTD - The Trade Desk
« Reply #20 on: March 08, 2019, 06:50:25 AM »
My thesis is that there is a long runway for programmatic ad growth, rate of decline of take rate will be much smaller than the rev growth . Plus itís also a inflation hedge, advertising  over time with increasing ad/marketing spend The risk is that they have to be the a platform
of choice, there will be many ad tech companies but they have to be relevant in the market

Yea, I understand all of that and agree with that. That doesn't address the question of valuation though.


gjangal

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Re: TTD - The Trade Desk
« Reply #21 on: March 08, 2019, 06:59:21 AM »
I agree it maybe expensive in the short run. They are also investing in building out capabilities in the platform. IMO when there is a long runway with volume growth and a good operator owner, valuations take a backseat in the short term. I know itís not the answer you are looking for but sometimes price moves first, value is reflected later

glorysk87

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Re: TTD - The Trade Desk
« Reply #22 on: March 08, 2019, 07:39:00 AM »
I agree it maybe expensive in the short run. They are also investing in building out capabilities in the platform. IMO when there is a long runway with volume growth and a good operator owner, valuations take a backseat in the short term. I know itís not the answer you are looking for but sometimes price moves first, value is reflected later

I'm not saying it's expensive in the short-run. I'm saying it's expensive on an absolute basis and in the long-run. 3 years out assuming they don't fall victim to any of the numerous risks, to earn a 10% annual return on the name, you need it to trade to ~$255. That would put it at around 25x EBITDA in 2022, growing at around half the rate it grows now, with many of the same risks remaining. So what's a fair multiple for a company growing at a slowing 25% annually? I wouldn't say 25x EBITDA. Google grows at a comparable rate and trades at 11x, while being an arguably much higher-quality and lower-risk company.

Not sure why "valuation takes a back seat" when it's arguably the largest driver of expected future returns from here.

gjangal

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Re: TTD - The Trade Desk
« Reply #23 on: March 08, 2019, 08:06:18 AM »
It is expensive, letís get that out of the way. I am not debating it. Letís say i sold it for valuation purposes and didnít deploy money elsewhere because i couldn't find any other opportunities or i have excess cash every year to deploy, what would be a suitable entry point again?  Am i not timing the market on a long term opportunity? My view is for long term opportunities, itís better to hold and evaluate periodically if the main thesis is broken or not. If itís broken, sell it, if not why disturb compounding

alwaysdrawing

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Re: TTD - The Trade Desk
« Reply #24 on: March 10, 2019, 01:39:05 PM »
I have reduced my exposure here, as the valuation has leapt ahead, especially since I posted this thread in October 2017 when the share price was ~$65. 

I agree with glorysk87, it's much harder to justify the current share price using "conservative" growth prospects.  That said, I think growth could very well be much more significant than people expect, as programmatic advertising generally and connected TV specifically have a very long runway for growth that very likely will sustain higher than 25% annualized growth for the next 5 years.

When I look at a business like this, the real questions are:
1. Will TTD be the eventual winner in the programmatic advertising DSP market
2. If they win, how big is the market and what do the economics look like?

I expect that take rates will be relatively sustainable, and at this point, it looks like TTD is likely to win, as they are independent (rather than ad sellers like Amazon, Google, Facebook, etc) and as the current leader, their economics and data will be better and improve faster than competitors.  Google in the early days is a helpful comparison--they weren't the only search engine, but their acceptance and popularity helped propel them into continually improving their software and staying in the lead. 

How much can new competitors pour into AI technology like Koa, and compare that to TTD?  The biggest threat to TTD is the walled gardens:  Facebook, Google/YouTube, Amazon, and whether those companies end up controlling connected TV or if Roku and more open supply side platforms win.  That said, advertisers are also wary of giving those walled gardens too much power, as they would possibly control ad supply and the DSP platform.  That's not insurmountable--Facebook for example controls their entire ad market, but it seems to me that a third party independent like TTD is likely to remain a significant player and grow with the industry.

The bottom line is, how big is the wave of connected TV and programmatic advertising, and does TTD win?  My personal guess is that the end state of programmatic TV is very, very large, and it remains to be seen who wins, but if it's TTD, I'd expect the company to be much larger and a much more valuable stock than today. 

I'll also say that I'm very hesitant to place significant odds or values on what the future looks like here, but it's certainly true that there is more risk at $200 than there was at $65.  It's also worth noting that SAAS companies have rocketed higher in the last couple months after getting killed in Q4 2018.  If the general macro climate deteriorates, I'd expect TTD and all of the SAAS companies to decline more than the general market, which could provide buying opportunities at lower prices.  If you look at Q3 2018/Q4 2018 results, and expectations, and the stock price over the same timeframe, it's easy to see that the stock can move much more than changes in the underlying business.


gjangal

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Re: TTD - The Trade Desk
« Reply #25 on: May 09, 2019, 01:54:39 PM »
https://www.sec.gov/Archives/edgar/data/1671933/000115752319001166/a51982107ex99_1.htm


Still growing nicely. Looks like they have entered China with the right partners. Google , Facebook and Criteo  (I am a  bagholder in this one) have been unsuccessful at this. It remains to be seen how much they can grow in China

Down big today, but business metrics look good. Valuations obviously on the expensive side

Liberty

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Re: TTD - The Trade Desk
« Reply #26 on: July 05, 2019, 07:07:01 AM »
Write-up at ScuttleBlurb (subscription required):

https://www.scuttleblurb.com/ttd/
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