If You'd Invested $500 in The Trade Desk Stock 5 Years Ago, Here's How Much You'd Have Today
The Trade Desk (TTD) stock has seen a modest increase of 2.9% over the past five years, with a current value of $576 for a $500 investment. Despite robust earnings, the stock's valuation has decreased to 33 times free cash flow and 9 times sales, making it more affordable compared to Nvidia. The company anticipates a 14% sales growth in the upcoming quarter, indicating continued potential for growth in the digital advertising sector.
Digital advertising veteran The Trade Desk (TTD 2.90%) used to be hot stuff. In early December 2024, the stock had posted a market-stomping 156% gain in two years. The stock traded at market-darling valuation multiples such as 134 times free cash flow and 30 times sales. The Trade Desk made mighty Nvidia's (NVDA -0.98%) stock look affordable by comparison.
But things have changed.
The Trade Desk's recent earnings reports have been robust, but they were accompanied by a sobering market analysis and modest forward-looking guidance. The brutal market reaction wiped out several years of The Trade Desk's investor gains.
So if you invested $500 in The Trade Desk five years ago, that position would be worth just $576 today:
TTD Total Return Level data by YCharts
The S&P 500 (^GSPC -0.11%) market index more than doubled over the same period, in terms of total returns. That's an above-average compound annual growth rate (CAGR) of 15.6% versus The Trade Desk's anemic 2.9%.
Image source: Getty Images.
Silver lining of the reality check
These days, you can buy The Trade Desk's stock at a less outrageous valuation of 33 times free cash flow and 9 times sales. If the stock price doubled today, the shares would still carry lower valuation multiples than Nvidia's 62 times free cash flow and 30 times sales.
Mind you, The Trade Desk is still far from a deep-discount value stock. These multiples are appropriate for a fast-growing business addressing a large target market.
And I would argue that The Trade Desk fits that description. Its sales have been soaring for years, and free cash flows are richer than ever:
TTD Revenue (TTM) data by YCharts
The company's near-term outlook has been less bullish in recent quarters, but management still expects roughly 14% sales growth in the third-quarter report. This growth story is far from over. The 2025 stock price cuts simply made this top-notch company more affordable.
