The Trade Desk‘s stock tumbled nearly 11% today after Morgan Stanley downgraded the adtech company to “equal-weight,” saying that cracks are showing in its core connected TV business.
Video ad billings slowed to 11% growth last quarter, down from more than 30% in prior periods, stoking fears that competition and advertiser frustration are dragging on performance.
“We have been wrong about the durability of TTD’s growth in the face of lingering execution concerns, softness in the open web ad market, and intensifying competition in CTV,” analysts wrote in a note.
They also flagged advertiser pushback on fees, noting that The Trade Desk’s take rate is nearly double that of rival DSPs. OpenPath and Kokai, meanwhile, are viewed by some buyers as consolidating control and reducing flexibility, “arguably reminiscent of past objections to Google’s DV360.”
The downgrade follows The Trade Desk’s weaker-than-expected third-quarter revenue outlook of 14% growth, which revived concerns that first surfaced after its fourth-quarter miss last year and “implies continued challenges ahead,” Morgan Stanley said in their research note.
In a statement to ADWEEK, a Trade Desk spokesperson said more marketers are questioning the “cheap reach” of walled garden platforms. “Self-reported campaign measurement often does not match business outcomes, creating misalignment between the marketing team and other business stakeholders,” the spokesperson said, adding that “open internet channels continue to thrive and grow.”
Adding to the pressure: the Trade Desk has been facing headwinds for several months, including Amazon’s expanding DSP, which recently struck deals with Roku and Disney to reach an estimated 80 million U.S. households and secure premium inventory across Disney+, ESPN, and Hulu. Advertisers have already shifted millions in spend from The Trade Desk to Amazon, as ADWEEK previously reported.
The Trade Desk CEO Jeff Green pointed to rising use of CTV and OpenPath in Q2 earnings, but buyers and publishers have long voiced frustration with Kokai, its latest UI rollout, and new fees, as ADWEEK exclusively reported.
