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Shares of digital advertising specialist The Trade Desk (TTD) fell on Friday morning after the company reported its first-quarter results late Thursday, extending a sell-off that has left the growth stock down more than 40% year to date.
The Trade Desk’s first-quarter performance was not outright negative. The company reported revenue of $689 million, up 12% year over year, meeting guidance for revenue of at least $678 million. Customer retention remained above 95%, consistent with the company’s track record over the past decade. Free cash flow was also strong at $276 million, representing 40% of revenue.
However, the pace of growth continued to slow. Revenue grew 25% in the first quarter of 2025, but the growth rate had already decelerated to 14% by the fourth quarter. In the first quarter of 2026, revenue growth was 12%, marking another step down. Profitability also deteriorated: non-GAAP earnings per share fell to $0.28 from $0.33 a year earlier, while adjusted EBITDA margins compressed versus the prior-year period.
On the earnings call, CEO Jeff Green said the current macroeconomic environment is weighing on the business. He cited increased geopolitical tensions and described how advertisers and agencies are navigating a rapidly evolving landscape, with “global economic pressures, wars, and tariffs” making it harder for some brands and categories to grow.
The company guided for second-quarter revenue of at least $750 million, implying year-over-year growth of about 8%. That would represent another decline from the 12% growth reported in the first quarter.
The sell-off has reduced the stock’s valuation. Shares are down sharply from their 52-week high of $91.45, and the forward price-to-earnings ratio has compressed to 19. The article argues that a lower price does not necessarily mean the stock is cheap enough, particularly given the continued slide in revenue growth from the mid-20s to low double digits and the possibility that macro conditions may take time to improve.
The author said they would remain on the sidelines until The Trade Desk shows signs of reaccelerating growth or the stock declines further to better compensate for the risks.
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