Daily Stock Pick: May 3rd, 2023

This year, businesses will spend an estimated $680 billion on digital advertising. By 2027, this number will be above $900 billion. 

Out of this $900+ billion, over 80% is expected to be generated through something called programmatic advertising. This is essentially using automated technology to buy and sell digital ads. Think machine learning algorithms automatically serving targeted ads to specific audiences based on their preferences and buying patterns.

Today’s stock pick is a giant in the programmatic advertising space – with a market-leading platform that enabled it to post a 32% revenue growth in 2022 despite the pullback in the global ecommerce market. Add on a visionary CEO at the helm, and you have a recipe for a stock that can only benefit from the world’s ongoing digital transformation.

The Trade Desk, Inc. (TTD)

The Trade Desk was founded by Jeff Green, a digital advertising pioneer who founded the AdECN marketing platform in 2003 and sold it to Microsoft in 2007. Still the CEO of the company, Green went after the growing programmatic advertising market with The Trade Desk a couple years later.

Today, TTD is a programmatic advertising titan. Its key strength is its AI-powered platform that is 100% independent from the advertising ecosystems owned by Facebook and Google. Over the past 7 years, its revenue has surged an astounding 14x. Its 32% revenue growth in FY 2022 amid a challenging backdrop just lends further evidence to TTD’s strength.

While TTD’s stock has predictably come down from its highs in late 2021, it has been a strong performer in 2023 with an impressive 42% YTD increase. While that may seem expensive, it still only puts TTD’s stock back at September 2022 levels and substantially below its 2021 highs.

 One last thing to consider – while TTD’s revenue trajectory has been nothing short of impressive, its $1.6 billion in 2022 revenues represents only the tip of its total addressable market, which could hit well over $700 billion in a few short years. 

In short, for all its achievements, TTD may just be getting started.

To your wealth,
Felix @ Ace of Investing