(Reuters) – Shares of advertising tech firm Trade Desk plunged more than 24% on Friday following a quarterly revenue forecast dented by a slowdown in spending by labor strike-hit automakers and media companies.
The projection, given late on Thursday, was in stark contrast to expectations of an advertising market rebound signaled by upbeat performances from Alphabet’s Google, Meta and Snap.
“After hearing commentary across the digital ad space to date, we are a bit surprised by the weak guide, but the company’s exposure to brand and top of funnel could be the driver,” Piper Sandler analysts said.
Trade Desk has what it calls “a marketplace” of more than 200 companies, including ESPN, Hulu and Fox, where advertisers can choose to show their ads.
If the share price holds at the $58.1 premarket level, the company was set to lose more than $9 billion in market value. Its shares have jumped by more than two-thirds this year.
The company also caters to brands such as Warner Bros Discovery, which warned this week the sluggishness in advertising trends could continue into the next year.
Trade Desk expects fourth-quarter revenue of at least $580 million, which was $30 million lower than estimates, according to LSEG data.
CEO Jeff Green said the company faced caution from some advertisers including industries impacted by the recent strikes such as automakers and media from the second week of October.
But he added that the trends had stabilized by the first week of November.
That, as well as better-than-expected results for the September quarter, led some analysts to say that the forecast might have been conservative.
“We appreciate the near-term conservatism and think that Trade Desk sits in a unique position to deliver defensibility in a deteriorating macro but also growth in an improving one,” RBC Capital Markets analysts said.
Still, at least 11 analysts cut their price targets on the stock, pushing the median to $84, compared to $88.6 at the end of October, as per LSEG data.
(Reporting by Samrhitha Arunasalam in Bengaluru; Editing by Sriraj Kalluvila)
