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Can Trade Desk (TTD) Hold Up on Future Cash Flow?

Simply Wall St · 1d ago

Trade Desk has seen its share price fall sharply in recent years, which puts the focus squarely on whether the current US$14.34 level can be supported by the cash the business is expected to generate. With investors watching fresh deals in connected TV advertising, the core question is how those developments feed into the company’s underlying cash flows.

  • Over the past 3 years the stock has declined 82.2%, which puts a lot of weight on whether the current valuation still lines up with the cash the business can realistically produce.
  • The recent expansion of Telly’s partnership with Magnite, where major buyers such as Trade Desk can participate in programmatic home screen ads, may support expectations for future transaction volumes and the timing of advertising related cash flows.
  • If you'd rather focus on earnings, this one's for you. See why Trade Desk's 16.6x P/E tells a different valuation story.

For investors, the debate is whether Trade Desk’s present share price is adequately backed by the cash flows implied by a Discounted Cash Flow (DCF) view.

If you are weighing Trade Desk purely through a cash flow lens, it can help to compare it with other companies screened on similar fundamentals using the 32 high quality undervalued stocks.

Is Trade Desk a Bargain on Cash Flow?

The Discounted Cash Flow model estimates what Trade Desk might be worth today based on the $896.7 million of free cash flow it generated over the last twelve months and a set of future cash flow projections. Analysts are assuming those cash flows keep growing over time rather than shrinking, with forecasts extending into the mid 2030s.

On these assumptions, the DCF output sits substantially above the current share price of $14.34. Because the Telly and Magnite partnership opens another route for Trade Desk to capture connected TV budgets on the home screen, that new channel helps explain why the model leans toward stronger long term cash generation even though the market price still lags the DCF view. Find out what Trade Desk could be worth using our Discounted Cash Flow (DCF) estimate.

The Trade Desk Narrative: What Would Justify Today's Price?

Simply Wall St Narratives pick up where the Trade Desk valuation puzzle leaves off. They set out what kind of future growth, profitability and earnings profile would need to occur for the stock to be worth materially more or less than it trades for today. Each narrative links a specific fair value to a clear story about catalysts and risks, so you can track which version of events appears to be unfolding over time on the Community page.

Trade Desk followers are split between those who think the reset has gone too far and those who see the caution as justified.

Bull case: 51% undervalued

"Like most companies they’re jumping into AI in a significant way, with new tools such as Deal Desk and updated media planning that optimises campaigns in real time…"

Discover why this Narrative puts Trade Desk at 51% undervalued.

Bear case: 6% overvalued

"Heavy reliance on large clients, competition from walled gardens, dependence on CTV, high innovation costs, and limited geographic diversification create significant growth and earnings risks…"

Explore why this Narrative puts Trade Desk at 6% overvalued.

One more Trade Desk check that sits beside the price tag

Cash flows tell you what Trade Desk might be worth, but the people steering the business and how they are rewarded can heavily influence where those cash flows go over time. See who runs Trade Desk and how they are paid.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.