This advertising technology stock is extremely volatile and certainly not for the faint-hearted. Having added TTD in the portfolio back in April of 2020 around $US35, we have seen our funds triple and now more than half in the recent tech sell-off. With a market capitalisation of $US26bn – about the same size as Goodman Group (GMG) in Australia, TTD is not a small business however on an estimated P/E of 61x it is in the growth camp.
Staying with the Goodman comparison, GMG will likely do revenue of US$1.4b in FY22 then US$1.6bn in FY23 up ~20% & 13% respectively. TTD will likely do revenue of $US1.6bn in FY22 & over $US2bn in FY23 which is a growth rate of ~30% each year, the major difference being that GMG will do about the twice the profit in both years. The point here is that TTD is a real business generating profits that are growing at a strong rate, however, they are reinvesting more into the future, which is typical of US growth companies. Rising interest rates will continue to be a headwind for these sorts of stocks, and we believe more active management around positions such as our TTD holding will yield better results from here i.e. selling strength when it plays out.
MM likes TTD short term targeting ~US$80
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