Trade Desk stock has struggled to take off in 2021
The Trade Desk, Inc. (NASDAQ:TTD) is a global technology company that markets a software platform used by digital ad buyers to purchase data-driven digital advertising campaigns across various ad formats and devices. The cloud computing stock is up 69% year-over-year, but 2021 has been a different story.
TTD has taken an 11% haircut year-to-date. It's most recent pullback has the shares facing off with their 100-day moving average, a trendline that hasn't been breached since June. Nevertheless, 10 of 14 brokerages in coverage maintain "buy" or better ratings, with zero "sells" on the books.
Trade Desk has an extremely high valuation right now, with a price-earnings ratio of 137.06 and a forward price-earnings ratio of 92.59. Nonetheless, the tech company has generated an impressive growth rate on both its top- and bottom-lines, somewhat justifying the inflated stock price.
Since fiscal 2017, Trade Desk has grown revenues by 236% and net income by 418%. In addition, TTD's trailing 12-month revenues are up 24% and its trailing 12-month net income has increased 9% compared to fiscal 2020. Trade Desk also has a solid balance sheet with $705 million in cash and $292.6 million in total debt. Overall, Trade Desk stock has strong potential as a growth play, making TTD’s recent dip a great buying opportunity for long-term investors despite the high valuation.
Options seem to be the intriguing route. Trade Desk's Schaeffer's Volatility Index (SVI) of 45% ranks in the 8th percentile of its annual range, meaning short-term options are pricing in relatively low volatility expectations at the moment. Plus, the security has consistently rewarded premium buyers over the past year. I's Schaeffer's Volatility Scorecard (SVS) of 98 (out of a possible 100) indicates the stock has tended to make outsized moves on the chart, relative to what the options market was anticipating.