Perhaps one of the more surprising stock declines over the last year came from The Trade Desk (NASDAQ: TTD). The stock is down 55% over the last year, and that includes the massive decline after its earnings report for the fourth quarter of 2024, when it missed its own revenue estimate.
In addition to this and other missteps, the company faced unexpected macro challenges that contributed to the media stock‘s decline. Here’s what changed and what The Trade Desk might do to move forward.
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Unfortunately, The Trade Desk’s troubles revolve around artificial intelligence (AI) and challenges from some of the larger platforms.
One issue was the rollout of its AI-driven Kokai ad buying platform. Its customers found the platform to be harder to use since they could no longer see all parameters on one screen. Also, automating took away some of the manual controls that customers liked.
Moreover, large industry players like Alphabet and Amazon have become walled gardens, giving their own ad platforms preferential treatment for buying premium ads over platforms such as The Trade Desk.
What’s more, growth has undeniably slowed. In 2025, its $2.9 billion in revenue rose by 18%. Still, that was below the 26% growth rate in 2024, and the fact that it grew by just 14% in the fourth quarter of 2024 implies the slowing will continue.
Amid those challenges, the stock price has fallen to levels last seen during the brief bear market in early 2020.
However, investors have some hope that the stock could recover. It remains profitable, as its net income of $443 million grew 13%. Investors should note that the profit growth only slowed because of a near doubling of income tax income, rather than a performance-based issue.
Also, with AI engines often bypassing traditional ad platforms, some analysts have become concerned that advertising is becoming less critical. Nonetheless, rumors have circulated that OpenAI was in talks with The Trade Desk to help companies place ads on ChatGPT. If true, it implies that the internet’s ad model is not broken as some had feared, and it makes it much less likely that the AI would wall off The Trade Desk’s platform.
Furthermore, The Trade Desk stock seemed overvalued in the past. Fortunately for bargain hunters, that appears to have changed. Today, its P/E ratio is 31, close to the S&P 500‘s 29 average. Additionally, its forward P/E ratio is 13, a level that could set the stock up for a dramatic comeback if optimism returns.
