The Trade Desk Inc.

The Trade Desk Inc (NASDAQ: TTD) works with ad buyers to provide a technological platform. Data Management Platform, Cross-Device Targeting, Video Advertising, Mobile Advertising, and other services are among the company's offerings.

Why Investor's Should Book Profit?

• Stretched valuations: TTD shares are available at an NTM EV/Sales multiple of 30.5x compared to the industry Technology median of 4.2x, while on NTM Price/ Earnings multiple, it is trading at 103.9x compared to the industry median of 17.3x. This implies that the shares are overvalued against the industry.

• Significant uptick in stock price: The company's stock price has surged 88.76% in the past six months and is currently trading close to the higher end of its 52-week range of USD 46.71 to USD 97.80.
• Hovering near the upper band of the Bollinger band indicator: At the daily price chart, the stock of TTP closed near the upper range of its 20-days Bollinger band, indicting a possible correction from the recent level.

Valuation Methodology (Illustrative): Price to Sales Based

Stock Recommendation:

The company reported a 39% YoY increase in revenue during Q3FY21 (USD 301.1 million vs. USD 216.1 million in Q3FY20), and the diluted EPS improved to USD 0.12 from USD 0.08 in pcp. However, the stock is trading at stretched valuations on multiple fronts compared to the industry, indicating that the strong business fundamentals are adequately reflected at current trading levels. Furthermore, even the technical indicators point towards a bearish trend and the price may correct or consolidate further. Therefore, based on the above rationale and valuation, we recommend a "Sell" rating on the stock at the closing price of USD 97.09 on November 09, 2021.

One-Year Technical Price Chart (as on November 09, 2021). Analysis by Kalkine Group

*The reference data in this report has been partly sourced from REFINITIV.  

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