The Trade Desk has gotten torched over the last six months - since September 2025, its stock price has dropped 41.9% to $26.48 per share. This was partly due to its softer quarterly results and might have investors contemplating their next move.

Following the pullback, is this a buying opportunity for TTD? Find out in our full research report, it’s free.

Why Are We Positive On The Trade Desk?

Built as an alternative to "walled garden" advertising ecosystems, The Trade Desk (NASDAQ: TTD) provides a cloud-based platform that helps advertisers and agencies plan, manage, and optimize digital advertising campaigns across multiple channels and devices.

1. Skyrocketing Revenue Shows Strong Momentum

A company’s long-term sales performance is one signal of its overall quality. Any business can have short-term success, but a top-tier one grows for years. Over the last five years, The Trade Desk grew its sales at an impressive 28.2% compounded annual growth rate. Its growth surpassed the average software company and shows its offerings resonate with customers.

2. Customer Acquisition Costs Are Recovered in Record Time

The customer acquisition cost (CAC) payback period measures the months a company needs to recoup the money spent on acquiring a new customer. This metric helps assess how quickly a business can break even on its sales and marketing investments.

The Trade Desk is extremely efficient at acquiring new customers, and its CAC payback period checked in at 5.5 months this quarter. The company’s rapid recovery of its customer acquisition costs indicates it has a highly differentiated product offering and a strong brand reputation. These dynamics give The Trade Desk more resources to pursue new product initiatives while maintaining the flexibility to increase its sales and marketing investments.

3. Operating Margin Reveals a Well-Run Organization

Many software businesses adjust their profits for stock-based compensation (SBC), but we prioritize GAAP operating margin because SBC is a real expense used to attract and retain engineering and sales talent. This is one of the best measures of profitability because it shows how much money a company takes home after developing, marketing, and selling its products.

The Trade Desk has been a well-oiled machine over the last year. It demonstrated elite profitability for a software business, boasting an average operating margin of 20.3%. This result isn’t surprising as its high gross margin gives it a favorable starting point.

Final Judgment

These are just a few reasons why we're bullish on The Trade Desk. After the recent drawdown, the stock trades at 4× forward price-to-sales (or $26.48 per share). Is now the time to initiate a position? See for yourself in our full research report, it’s free.

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