In the fast-paced, ever-changing world of digital advertising, one company stands out as a potential goldmine for investors seeking long-term, exponential growth. The Trade Desk (NASDAQ: TTD) might be the stock you’re looking for if you want to “trade up” your portfolio.
I’m not saying that this digital marketing beast absolutely will multiply your investment by 10 over the next decade, starting from a $29 billion market cap today — but it just might reach that incredible target. Of course, you can’t say that about too many investment ideas, even in this age of swooning market darlings and affordable growth stocks.
A revolution in digital advertising
The Trade Desk is no ordinary digital advertising platform. It’s more like a tech wizard waving its algorithmic wand to create, manage, and optimize digital campaigns across formats and devices. As the global digital advertising market prepares to triple over the next decade, The Trade Desk is ready to ride the wave of the market-share-gobbling revolution.
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The Trade Desk’s resilience is awe-inspiring. Even as the global economy wobbled in 2022, The Trade Desk’s annual revenue rose 32%. And when COVID-19 shook the world in 2020, the company still managed to grow its top-line business by 26%. The Trade Desk’s disruptive ways are winning market share in good times and bad.
It’s no wonder ad buyers flock to The Trade Desk’s services when budgets are tight. The company’s expertise lies in squeezing maximum value out of every penny in the digital advertising budget.
The Green Machine at the helm
The Trade Desk’s success isn’t just a product of its cutting-edge technology. The company is steered by the visionary leadership of CEO Jeff Green. With experience dating back to the dot-com boom of the late 1990s, Green has seen the digital advertising landscape evolve firsthand. After founding the AdECN marketing platform in 2003 and selling it to Microsoft four years later, Green set his sights on pioneering programmatic advertising with The Trade Desk.
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Green’s foresight helped The Trade Desk set itself apart from competitors. Its cloud-based, artificial-intelligence-powered platform has become the go-to choice for major global ad agencies. By staying independent from proprietary ecosystems like Meta Platforms‘ Facebook and Alphabet‘s Google, The Trade Desk avoids conflicts of interest and keeps its customers happy.
Under Green’s guidance, The Trade Desk’s sales have skyrocketed nearly 14 times in just seven years. The company’s profitability since 2013 and its diverse appeal across industry groups are testaments to Green’s leadership. With an $800+ million stake in the company, including special shares giving him nearly 50% voting power, Green is committed to guiding The Trade Desk into the future.
Green’s vision of connected TV’s potential and the need for an industry-standard privacy-protecting identifier keeps The Trade Desk at the cutting edge of innovation. That’s been the story throughout this company’s long history, and there are many chapters left in this extended growth story.
A trillion-dollar opportunity beckons
The Trade Desk’s success so far is just the tip of the iceberg. With an addressable market worth over $600 billion today, $820 billion by 2025, and far more in the distant future, there’s plenty of room for growth. Digital ads are stealing market share from old-school marketing channels like printed ads, billboards, and cable TV.
And The Trade Desk holds a unique position in the digital ad sector as a mediator between ad-viewing consumers, content publishers with available ad space, and the companies that spend money on marketing. This company provides the online glue that binds the whole market together, allowing marketing directors to automate their ad campaigns through The Trade Desk without worrying too much about exactly who puts their promotional materials in front of consumers.
Now, The Trade Desk will never consume the ad market’s entire annual revenue pie, given that it charges a relatively small fee to help clients make the most of the ad content the company funnels into all the right marketing channels. Then again, it doesn’t have to.
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It’s easy enough to imagine a trillion-dollar global digital marketing budget a decade down the road. The Trade Desk keeps approximately 20% of the ad dollars that flow through its services. Many large, mature tech companies trade for at least 5 times trailing sales; if The Trade Desk settles down to a calm price-to-sales ratio in that range, it could reach a $300 billion market cap by managing about one-third of the worldwide market for digital ad campaigns.
Shoot for the stars — there’s nothing wrong with landing in the treetops anyway
Maintaining stock returns at a compound average growth rate (CAGR) of 26% for a decade is no small feat, but The Trade Desk may have the chops to pull it off. With its strong leadership, industry-leading technology, and a healthy digital ad market in the long run, this stock could indeed deliver a 10x share price growth in 10 years.
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And let’s say it falls short of that hyper-ambitious goal and only gives investors a 5x return. That would only be a failure compared to the nigh on impossible thought experiment I just walked you through. In that scenario, its investors would still beat the stock market’s long-term average returns by a wide margin.
So investors seeking a stock that can catapult their portfolio to new heights should take a closer look at The Trade Desk. After all, who wouldn’t want to trade up to a potential 10-bagger?
