TTD Stock In Focus: Morningstar Sees Market Share Shrinking As Amazon, Google And Meta Ramp Up Ad Competition

Morningstar says Amazon’s advertising platform and other data-heavy rivals could put pressure on The Trade Desk.

• Morningstar said the Trade Desk’s independence appeals to advertisers, but its limited first-party data could hurt competitiveness. 
• The firm expects TTD’s digital ad market share to decline from nearly 2% to about 1.2% by 2034. 
• Amazon’s data-rich DSP is gaining traction with ad agencies, while lower fees could pull spending from TTD and pressure its 20%-21% take rate. 

The Trade Desk Inc. (TTD) faces growing pressure from Amazon as advertisers shift toward automated, data-rich platforms. Morningstar analyst Matthew Dolgin expects the company’s market share to decline over the next decade, while rising competition could also squeeze its take rate and margins. 

The Trade Desk’s Data Advantage Under Pressure

The Trade Desk runs a demand-side advertising platform that allows marketers to buy and optimize campaigns across different digital channels. Its independence from media inventory gives advertisers a separation from the conflicts that can arise on platforms such as Google, Meta, and Amazon, but analyst Dolgin pointed out that this structure also leaves TTD with less first-party data.

Dolgin estimates the digital advertising market at roughly $800 billion today and expects it to reach $1.5 trillion by 2035. Despite that expansion, he expects TTD's share to fall from just below 2% currently to about 1.2% by 2034 as competition increases.

The Trade Desk stock edged 0.7% higher overnight, ahead of Thursday, and is on track for a weekly gain. 

Amazon Emerges As Key Rival To The Trade Desk

Morningstar sees Amazon as one of the biggest challenges to TTD. Amazon can combine its advertising business with information generated through its marketplace and other consumer services, giving its demand side platform (DSP) access to behavioral signals that TTD does not directly own.

The analyst said major ad agencies are testing Amazon’s DSP more often. Lower fees could lead them to move more spending away from TTD, putting pressure on its 20%-21% take rate. 

Automation Adds Another Challenge For TTD 

TTD's platform gives advertisers considerable control over targeting and campaign decisions. However, Dolgin said advertisers are moving toward simpler, highly automated tools that can optimize campaigns with less manual involvement.

Google, Meta Platforms (META), Amazon and AppLovin (APP) can draw on extensive proprietary datasets to power these systems. TTD relies more heavily on third-party information and customer data, which Morningstar says could make its technology easier for rivals to replicate.

Morningstar assigns TTD a fair value estimate of $16 and expects revenue growth to slow to low- to mid-single digits over its forecast period. The firm also projects gross margins to settle between 70% and 75%, compared with historical levels above 80%.

The Trade Desk is also set to exit the S&P500 index on Sept. 21. 

TTD Stock: Retail View 

On Stocktwits, retail sentiment around the stock turned ‘bearish’ from ‘neutral’ with a 35% slump in message volume over the past week. 

A user said, “No catalyst coming, over spending on employee/management compensation, amazon/ google undercutting them, growth dwindling, and the CEO is trash. This company is still also being shorted to oblivion. Expect sub $10 before the year ends.” 

TTD stock has crashed 68% in the past twelve months. 

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