Trade Desk Stock Is 90% Below Its High. Can Earnings Turn the Tide?

The Trade Desk (NASDAQ:TTD) stock has sold off sharply this year, making it one of the worst performers on Wall Street. It has crashed by about 90% from its all-time high, with its market capitalization falling from $68 billion to $6.1 billion. Bulls hope that its upcoming earnings report helps turn the tide.

The Trade Desk Will Publish Its Earnings Report

The Trade Desk is a top technology company that operates a demand-side platform (DSP) that allows advertisers to and agencies to purchase, manage, and optimize digital ads using its automated technology. 

The company has become one of the top laggards on Wall Street because of its slow growth and missed expectations. Its last earnings report showed that revenue rose by just 3% YoY to $715 million, well below the previous double-digit trajectory. 

The Trade Desk’s key customers, who mostly include companies in the consumer packaged goods and automotive industries, have been slashing their marketing spend, citing tariffs and other challenges. Most importantly, there are signs that digital advertising trends are changing, while disagreements with Publicis Groupe have affected its growth.

Therefore, investors will hope that the company’s earnings will show that it has returned to some modest growth. Benzinga data shows that analysts are expecting its revenue to come in at $651 million, down by 11.9% from a year earlier. Even a modest improvement from these estimates will likely push the stock higher. 

The average estimate is that the GAAP earnings per share dropped to 25 cents from 45 cents in the same period last year. Trade Desk has missed its earnings forecast in the last two consecutive quarters. 

The company’s implied volatility has jumped to 159%, higher than its historical figure of 45%, a sign that the stock may have a big move. In its last result, it dropped by as much as 27% after the earnings miss.

The Trade Desk Has Formed an Island Reversal Pattern

The daily chart shows that the TTD stock has slumped this year, moving to a low of $11.56 in October. It has remained inside the narrow channel between the support and resistance levels of $11.56 and $15.23.

On the positive side, the stock has formed an island reversal pattern, which is a common bullish sign. This pattern happens when an asset consolidates after forming a big gap. As such, there is a possibility that the stock will rebound, potentially to the key resistance level of $15.2. A move above that level may see it jump to the psychological level of $20.

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