Overview
The Trade Desk (NASDAQ:TTD) saw its stock tumble after the company issued revenue guidance for the first quarter of 2026 that came in below analyst estimates. The aftermarket reaction was severe - shares dropped about 16%, erasing recent gains and bringing the stock back to levels last seen before the COVID era.
Quarterly results and guidance
For the fourth quarter, the company reported adjusted earnings per share of $0.59, ahead of the $0.34 that had been expected, while revenue increased to $847 million, surpassing consensus. Despite that apparent beat, the firm's guidance for the first quarter signaled deceleration. Trade Desk projected Q1 2026 revenue of $678 million, below the $688.4 million estimate from analysts.
Analyst reaction and downgrade
Loop Capital responded by lowering its recommendation on the stock from Buy to Hold. The firm characterized the quarterly report as simultaneously a beat on reported results and a softer-than-expected quarter when considering forward guidance. Loop highlighted the outlook for approximately 10% revenue growth in Q1 alongside about 500 basis points of year-over-year margin compression as worse than anticipated.
Loop also set a $25 price target for the shares, deriving that target from a multiple of 10 times its 2027 non-GAAP earnings estimate. The firm explained that it could not recommend initiating new positions until there is greater clarity that growth has normalized.
Drivers of the slowdown
Management attributed the weaker near-term outlook to macroeconomic pressures among certain advertiser categories. In particular, consumer packaged goods (CPG) and auto advertisers - which together represent more than a quarter of the company’s bookings - showed weakness. Trade Desk said that, absent the softness from those categories, growth would have been at least 5 percentage points higher.
Loop noted that while it views the stock as oversold and the issues as more macro-driven than the result of increased competitive pressure, the brokerage warned that regaining investor confidence could take time. The concern intensified after Trade Desk disclosed gross bookings growth of 11% for 2025, a figure that Loop said was lower than many investors had assumed.
Strategy and product focus
Chief Executive Jeff Green framed the company’s positioning around advertisers’ increasing focus on measurable outcomes and data-driven decision making, rather than prioritizing low-cost reach. He identified product work across Kokai, retail data partnerships and supply chain tools as focal points as the company moves into 2026.
Business model and investor watchlist
Trade Desk runs a demand-side platform that enables advertisers to buy digital ad inventory across channels including connected TV, mobile and online video. Investors are monitoring whether ad spending can remain resilient as brands weigh marketing budgets against broader economic uncertainty.
Key takeaways
- Q4 adjusted EPS of $0.59 and revenue of $847 million beat expectations, but Q1 2026 revenue guidance of $678 million missed consensus of $688.4 million.
- Loop Capital downgraded the stock to Hold and set a $25 price target based on 10x its 2027 non-GAAP EPS estimate.
- Weakness among CPG and auto advertisers - accounting for over 25% of bookings - trimmed growth, and management said growth would have been at least 5 percentage points higher without that weakness.