Trade Desk (NASDAQ: TTD) stock fell more than 12% in pre-market trading on Friday, May 8, after the ad tech company failed to meet all of Wall Street’s expectations for 2019. Last quarter.
For example, adjusted earnings of $0.28 per share were significantly below analyst estimates of $0.32. Furthermore, GAAP net income decreased to $40 million ($0.08 per diluted share), compared to $51 million ($0.10 per diluted share), in the same quarter last year.
On the other hand, revenue rose 12% year over year to $689 million, higher than the expected $679.5 million. The decline in stock prices therefore primarily reflects concerns about second-quarter guidance, with management now hoping for revenue of at least $750 million, $22.4 million below Wall Street expectations.
Currently, TTD shares are down more than 37% year-to-date, hovering around $20.5 in pre-market hours at the time of writing.
Wall Street cuts TTD stock price targets
As expected, Wall Street responded quickly to the price correction, with many companies revising their expectations for the Trade Desk.
For example, Oppenheimer removed its $35 TTD price target and downgraded the stock from “outperform” to “perform,” arguing that growth will not exceed single-digit numbers this quarter.
Likewise, KeyBanc downgraded the stock to “sector weight,” noting that the guidance fell short of its expectations.
“We were cautious on TTD’s earnings, but our expectations for the second quarter fell short of our expectations. We feel that turmoil in the Middle East, ad agency tensions, and changes in industry structure are putting pressure on growth.” KeyBanc analysts wrote.
The silver lining in all of this is that customer retention remained above 95% during the quarter, extending a streak that has lasted more than a decade.
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