is one of the leading independent demand-side platforms for programmatic advertising, especially in the connected TV market. Based on the business description in the SEC filings, the business model they run is about generating revenue as a % of ad spend, which can be improved by performance outcomes such as better targeting, measurement, frequency controls, etc.
While the niche itself sounds like a tempting area for investors, The Trade Desk stock has been one of the more painful charts in large-cap software and internet over the last year:
The stock is down more than 70% from its peak, despite the fact that the underlying business didn’t contract at all. For example, ’s revenue was about $739 million in the latest quarter (Q3 2025), which was up 18% YoY. On the profitability side, everything looked good, too (the adjusted EBITDA of $317 million gave TTD a margin of 43%). At the very same time, the company’s customer retention remains among the highest in the niche – above 95% (for the 11th quarter in a row). So, even in terms of unit economics metrics, nothing was pointing to a disaster.
But the stock sold off on competition risks. And that selloff forced market participants to adjust their earnings expectations down to a level that now looks disconnected from what the company is actually delivering. At least that’s my understanding of the current situation. Given that TTD hasn’t lost its main advantages, heading into next year, I think it should keep improving faster than the market is willing to admit, which makes TTD an ideal candidate for dip buying.
Why TTD Is Posed To Run Higher Next Year?
My general thesis on TTD stock sounds simple. The 2025 sell-off, in my opinion, was less about a demand issue and more about investors re-pricing the business because of execution concerns and louder competition headlines, especially around and . But the recent financials and product metrics don’t read like a broken company. They read like a company that had to tighten execution and is now back to pushing forward.
In addition to the strong Q3 numbers I mentioned at the beginning, management guided for Q4 sales at $840 million and adjusted EBITDA of $375 million, so at least on a QoQ basis, the growth is not going anywhere. If they execute on that, it reinforces a point the market has been fighting all year: this is not a demand-collapse story. One of the key features TTD rolled out in recent years – Kokai – is turning into a real combination of growth and margin leverage. The management team cited on the Q3 call that roughly 85% of clients use Kokai as their default experience. It really matters because adoption risk is what usually kills product-driven bull cases. Here, adoption is already largely happening. And what happens if it becomes the standard way campaigns are run? I think it’s going to be the case because the performance deltas cited by the management look large versus the prior platform (Solimar). Koaki gives 6% better cost per acquisition (CPA metric), 58% better cost per unique reach, and 94% better click-through rate (CTR metric). You don’t need to be a quant to see why that helps. Advertisers naturally care about outcomes in the first place. If a platform helps them buy the same media more efficiently, or get more results for the same budget, the natural follow-on behaviour is either they keep spending steadily and enjoy better ROI, or they reinvest and scale budgets because the economics look better.
The second catalyst I think the market underestimates is the scaling of agency JBPs (joint business plans). JBPs sound like corporate jargon, but they represent something investors typically love: a playbook for repeatable spend expansion. TTD already has over 180 live JBPs, and there are another 80 JBPs waiting in the pipeline, and the consolidated sum might be worth billions of dollars, per the management team’s commentary.
JBPs can widen the gap between strong accounts and average accounts. TTD highlighted that their JBPs are growing faster than their non-JBP accounts, and if so, that creates a mix-shift tailwind. If the faster-growing cohort becomes a bigger portion of the total, overall growth improves even if the broader market is only “fine.” That’s one of the ways 2026 can be different without requiring a booming ad cycle because TTD executes a playbook that systematically expands share in accounts that already spend heavily.
I believe the market just needs a pivot point. That might be a quarter where investors stop debating whether the company is fine and start debating how strong the recovery can be. Management’s Q4 guide sets up exactly that kind of moment. If they execute, 2026 estimates can start drifting upward, and the multiple can stop compressing.
TTD’s Valuation Looks Cheap
The Trade Desk trades at less than 21 times 2025 earnings and less than 19x 2026 earnings, which is quite low for the stock itself and for the firm’s sector overall.
If we use just 25x on FY2026 EPS with no premium put on the consensus expectations, this set of assumptions would imply $52 per share, which is almost 40% higher than the current price level for TTD. I know, investors can disagree on the right multiple here, and it’s fine. But the broader point is what’s important: you don’t need perfection anymore. A return to a “normal” quality multiple, if the market regains confidence in the growth and margin trajectory, can do a lot of work. The above 25x I assumed looks totally normal for TTD, if its margins keep improving amid wider Kokai adoption and more JBPs signed.
Risks To Consider
No bullish thesis is clean here. First, the competition from Amazon and Google continues to dominate headlines, and fee pressure is always possible. In case TTD misses its chance to capitalise on Kokai and JBPs, and all the advantages I listed previously don’t translate into real spend expansion, the “product-led rebound” won’t show up in the numbers.
Also, technically, if the stock is in a fragile zone. TTD has already lost 70% of its market cap for the past year, and it can go lower, with support zones lying 20-30% below the current price levels.
Conclusion
Anyway, I see 2026 as a rebound year for The Trade Desk. I don’t expect ad spend to suddenly go vertical from here. What I lean on is the assumption that TTD is building a tighter operating cadence around products and commercial motions that can compound, and if that shows up in reported results next year, the stock doesn’t need to go back to the highs to deliver strong returns. It just needs the market to stop pricing it like a broken story. And I think that should happen.
TTD is a “Buy” stock for 2026, in my view.
