The Trade Desk: A Year of Market Disconnect

For shareholders of The Trade Desk, 2025 has been a profoundly disappointing period. The company's market valuation has collapsed, even as its underlying business continues to post growth. This stark divergence between solid operational performance and a share price that has lost roughly two-thirds of its value presents a critical puzzle: is the market overreacting, or is a once-celebrated growth narrative genuinely breaking down?

Contrary to the stock's performance, the company's business engine is still running effectively. The third-quarter results for 2025 revealed revenue of $739 million, representing an 18% year-over-year increase. This demonstrates that the core advertising demand on its platform is far from collapsing.

Key operational metrics tell a story of resilience:

• Revenue Growth: Q3 revenue reached $739 million, an 18% increase from the prior year.
• Profitability: Adjusted EBITDA stood at $317 million, with a margin of 43%.
• Client Loyalty: The customer retention rate has remained above 95% for 11 consecutive quarters.
• Guidance: Management's Q4 revenue forecast is approximately $840 million.

These figures highlight a significant disconnect. The substantial decline in share price, occurring alongside double-digit revenue expansion, points to deep-seated market skepticism regarding future growth dynamics and external risks. Some observers suggest this pessimism may have been overdone.

A Brutal Year for Shareholder Value

The stock has been one of the worst performers within the S&P 500 this year. Starting 2025 with a market capitalization near $70 billion, the company's value has plummeted to approximately $19 billion. Shares recently traded at $38.60. While this is notably above the 52-week low of $30.80 hit in December, it remains about 68% below the peak reached in early January.

Should investors sell immediately? Or is it worth buying The Trade Desk?

Despite a recent partial recovery over recent weeks, the stock continues to lag the broader technology sector. The primary pressures include heightened competitive concerns, particularly from large technology conglomerates, and macroeconomic headwinds. Potential tariffs that could impact major advertising clients have added to the uncertainty.

The Long-Term Case: Connected TV Leadership

Looking ahead to 2026, some analysts are refocusing on the company's structural advantages. The core of the long-term investment thesis remains its platform for Connected TV (CTV), which is widely regarded as a leading and powerful tool.

The strategic opportunity is clear: The Trade Desk is positioned to benefit from the ongoing shift of advertising budgets away from traditional linear television toward digital, data-driven video and CTV campaigns. A significant portion of its revenue already originates from these formats. Coupled with the persistent "cord-cutting" trend—the move away from traditional cable and satellite TV—this provides a sustained tailwind for the business.

Valuation Reset and Critical Juncture

From a valuation perspective, the stock has cooled dramatically. The current market cap of around $19 billion sits well below prior-year levels, signaling that the market has drastically reduced the premium it once assigned for future growth. The technical chart pattern reinforces this breakdown. Although the price has recovered above the 50-day moving average of $35.30, it continues to trade roughly 22% below its 200-day line, indicating a prevailing longer-term downtrend.

The environment remains challenging. Discussed tariffs could pressure key advertising clients, while competition threatens to compress margins and limit growth potential. The immediate catalyst will be the next earnings report. The release of Q4 results, and specifically whether the company meets or exceeds its $840 million revenue target, will likely determine if the negative sentiment from 2025 begins to dissipate or if the current skeptical valuation is justified.