The Trade Desk Faces Unprecedented Market Downturn and Index Exclusion

The year 2025 has delivered a historically poor performance for The Trade Desk, positioning it as the weakest constituent within the S&P 500. A staggering decline of nearly 67% since the start of the year has been compounded by a significant technical blow: its removal from the Nasdaq-100 index, triggering forced selling by institutional funds.

Beyond the mechanics of index trading, fundamental concerns are driving the sell-off. The company's rapid growth trajectory is showing clear signs of moderation. While third-quarter revenue advanced by 18% to $739 million, the guidance for the fourth quarter implies a further slowdown to approximately 13% growth. This deceleration is particularly alarming for a stock long valued by the market as a high-growth entity.

Amazon's Aggressive Expansion Poses Existential Threat

A primary source of investor anxiety is the aggressive expansion of Amazon's advertising business. In 2025, the e-commerce giant has grown this segment to an annual revenue run-rate exceeding $50 billion. Of critical concern is Amazon's encroachment into Connected TV (CTV), The Trade Desk's most vital growth engine accounting for roughly half of its business.

Amazon is securing exclusive partnerships with major streaming providers, including Netflix, Disney, and Roku. This strategy moves valuable advertising inventory into closed ecosystems, or "walled gardens," diverting it away from the open internet model upon which The Trade Desk's platform relies. Although CEO Jeff Green emphasizes his company's value proposition of neutrality and independence, the combined market power of Amazon and the AI-driven personalization capabilities of rivals like Google and Meta are applying intense pressure to its business model.

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

Index Removal Triggers Forced Liquidation

Adding institutional selling pressure to these operational headwinds, The Trade Desk was officially deleted from the Nasdaq-100 index on December 22, 2025. Following its massive valuation decline, the company no longer met the criteria for inclusion among the exchange's 100 largest non-financial firms. Consequently, index-tracking funds and ETFs were compelled to liquidate their holdings. This automated selling wave hits a stock already trading near its lows, with its price currently at $38.34.

Valuation Premium Persists Despite Collapse

Even after the dramatic price collapse, The Trade Desk shares cannot be considered cheap by traditional metrics. The price-to-earnings (P/E) ratio remains elevated at approximately 44, significantly above the S&P 500 average of 26. Investors continue to pay a substantial premium for growth that is visibly fading.

Management, however, views the valuation as attractive and is sending a clear signal of confidence. The company repurchased $310 million worth of its own shares in the third quarter alone and has authorized an additional $500 million for buybacks. With a debt-free balance sheet, The Trade Desk maintains the financial flexibility to continue these support measures as it strives to reposition itself within a landscape increasingly dominated by technology giants.