Wedbush Securities has moved The Trade Desk from Neutral to Underperform, saying investor enthusiasm over a possible advertising partnership with OpenAI pushed the stock beyond what the firm views as justifiable near-term economics.
The downgrade followed a roughly 18% surge in The Trade Desk shares after reports suggested the company might assist in monetizing ad inventory connected to OpenAI’s ChatGPT. Wedbush analyst Alicia Reese told clients the price action reflected a narrative-driven reaction that the firm does not see supported by its financial analysis.
Reese acknowledged the strategic significance of the rumored arrangement, calling it a "vital long-term strategic move against AI search cannibalization." Still, she argued that the immediate uplift in market value overstates the expected financial contribution from such a deal.
Wedbush quantified its outlook for the partnership and found the expected near-term benefits to be limited. The firm projects incremental EBITDA of just $42 million in 2027 attributable to the collaboration. By Wedbush’s calculation, the close to $2 billion increase in market capitalization linked to the news implies an implied multiple of roughly 53 times that incremental EBITDA.
On revenue, Wedbush estimates The Trade Desk could secure between $31 million and $77 million in 2026, and between $56 million and $140 million in 2027 from the reported tie-up. Those figures, the firm notes, would represent only about 1-4% of The Trade Desk’s projected revenue base in those years, indicating a modest contribution relative to the company’s overall top line.
In addition to asserting the limited near-term financial upside, Wedbush warned of structural risks over a longer horizon. The bank highlighted the possibility of disintermediation if OpenAI elects to develop an in-house advertising platform, arguing that maturation of OpenAI could lead it to build a proprietary demand-side platform (DSP), which would reduce the role of third-party intermediaries.
Despite downgrading the rating, Wedbush retained a $23 price target on the stock. The firm’s view separates strategic importance from immediate economics: while the potential collaboration may carry long-term strategic implications in the evolving AI search and advertising landscape, the current market reaction appears disconnected from the modest financial outcomes Wedbush models.
Key points
- Wedbush cut The Trade Desk to Underperform after shares jumped roughly 18% on reports of a potential OpenAI ad deal.
- The firm forecasts only $42 million of incremental EBITDA in 2027 from the partnership, implying an approximate 53x multiple on the market value increase tied to the news.
- Estimated revenue gains are modest - $31m to $77m in 2026 and $56m to $140m in 2027 - representing about 1-4% of projected revenue.
Risks and uncertainties
- Potential disintermediation risk if OpenAI develops a proprietary, in-house DSP, which could affect digital advertising intermediaries and ad tech platforms.
- The market’s "headline pop" may create volatility if the rumored deal’s actual economics fail to meet investor expectations, impacting technology and advertising sector sentiment.