What happened:
Shares of advertising software maker The Trade Desk (NASDAQ:TTD) rose 9.2% in morning trading after the company reported second-quarter results. The Trade Desk managed to improve its gross margin this quarter. Notably, revenues increased 26% year-over-year, driven by solid performance in its key business segments, including Connected TV, Retail Media, and Identity. In addition, revenue forecasts for the next quarter came in higher than Wall Street estimates. Overall, this was a quiet quarter for TTD.
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What does the market tell us:
The Trade Desk’s shares are highly volatile, having experienced 15 price swings of over 5% in the last year. With that in mind, today’s price action suggests that while the market considers this news significant, it does not view it as something that would fundamentally change its perception of the company.
The last major move we reported on was 16 days ago, when the company lost 10.4% while major indexes declined. The Nasdaq lost 3%, while the S&P 500 fell 1.7% after weaker-than-expected performances from Alphabet (YouTube ad revenue missed estimates) and Tesla (7% drop in auto sales). Tech giants like Microsoft, Alphabet, Meta and Apple have given back some of their year-to-date gains as a new market narrative – in favor of small-cap stocks – gains momentum after belief grows that the Fed will begin cutting interest rates in the second half of the year.
Sentiment also benefited from improving inflation numbers as headline numbers moved closer to the Fed’s 2% target. Overall, the change suggests investors are finding more reasons to hold positions in risky assets, particularly small caps, which tend to be more volatile.
The Trade Desk is up 38.7% year-to-date and is trading at $97.85 per share, close to its 52-week high of $101.52 set for July 2024. Investors who purchased $1,000 worth of The Trade Desk stock 5 years ago would be looking at an investment worth $3,599 today.
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