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Trade Desk Stocks Plunge 30% on Weak Predictions Related to Auto Sector Strikes

Jeff Green, CEO, The Trade Desk

Scott Mlyn | CNBC

Shares of Trade Desk plunged about 30% after hours Thursday after the ad tech company issued fourth-quarter revenue guidance well below analyst estimates.

Third-quarter results beat estimates. Here’s how the company did it:

  • Earnings per share: 33 cents, adjusted from 29 cents expected by LSEG, formerly known as Refinitiv
  • Income: $493 million versus $487.04 million expected by LSEG

For the December period, Trade Desk forecast revenue of at least $580 million, lower than the $610 million analysts expected, according to LSEG.

A Trade Desk spokesperson told CNBC that the forecast was “slightly lower than consensus, largely due to temporary caution by advertisers in certain verticals, such as automotive and media/entertainment in the United States.” United, because of the strikes.”

The United Auto Workers launched targeted strikes at select facilities against Detroit automakers starting September 15, then expanded the stoppages. The UAW and General Motors reached an agreement in late October that would end negotiations, following earlier deals with Ford Motor and Stellantis.

Separately, Hollywood actors initiated a work stoppage in mid-July and reached an agreement with the studios this week. The Writers Guild of America reached a new contract with the studios in September after a strike that began in May.

Jeff Green, CEO of Trade Desk, said during the earnings conference call that “starting around the second week of October, we started to see some transitional caution toward some advertisers.”

“We’ve seen some reduction in brand spending in verticals like automotive and consumer electronics, for example, particularly around mobile phones, media and entertainment,” Green said. “Some of these industries have recently been hit by strikes, such as the U.S. auto industry.”

Trade Desk’s technology helps brands reach relevant potential customers over the internet and has thrived in the world of streaming and online video. While most independent ad tech companies have struggled to compete with Google’s systems, Trade Desk built a business valued at $38 billion before its earnings release, largely by helping companies move their advertising budgets from traditional television to the connected television market.

Green said spending “stabilized” during the first week of November and “we are very confident that we will continue to outpace our industry.”

He added that the company’s “business is largely based on the world’s largest brands”, meaning that “while there is a bit of caution due to the macroeconomic uncertainty that everyone is facing confronted, we will of course not be safe from this in the short term. “

Trade Desk said third-quarter sales jumped 25% from $493 million a year earlier. Net income rose to $39 million, or 8 cents per share, from $16 million, or 3 cents, a year earlier.

The stock fell to $53.49 in extended trading after closing Thursday at $76.81. Before the after-hours move, shares were up 71% for the year.

Meta, Snap and Pinterest all noted a slowdown in the digital advertising market in their latest earnings reports, due in part to the war between Israel and Hamas.

Susan Li, Meta’s chief financial officer, said the company had expanded its guidance due to the unpredictability of the Middle East crisis, while Snap said it would not provide official guidance “due to the unpredictable nature of war.

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