(Bloomberg) — Trade Desk Inc. slumped as much as 31% in extended trading Thursday after the digital advertising platform gave weak revenue forecast for the current quarter, triggering a warning about the health of the advertising market.
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Meta Platforms Inc., Snap Inc. and Pinterest Inc., social media companies that rely on advertising sales, also fell on news of Trade Desk’s outlook.
Sales in the quarter ending in December will be at least $580 million, Ventura, California-based Trade Desk said in a statement. Analysts on average forecast $610 million, according to data compiled by Bloomberg. Shares fell as low as $52.74 after closing at $76.81. The stock had gained 71% this year through Thursday’s close.
Trade Desk provides advertising technology that is an alternative to services offered by Alphabet Inc.’s Google, Meta and Amazon.com Inc. The ad buying platform works with some of the world’s largest advertisers and brands, including Warner Bros. Discovery Inc. and Walmart Inc. and NBCUniversal.
The forecast shows “that economic pressures may weigh on the advertising market and the renewed acceleration in revenue growth forecast for 2024 may be premature,” Bloomberg Intelligence analysts Geetha Ranganathan and Kevin Near wrote in a research note.
Chief Executive Officer Jeff Green said in a conference call after the forecast was released that Trade Desk could see a decline in spending from October from companies such as automotive and consumer electronics, “particularly in mobile phones and media and entertainment.” Some of these industries have recently been affected by strikes, such as the US automotive industry.”
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As of this month, “we’ve seen spending stabilize,” Green said.
Analysts at Evercore pointed to “weakness in brand spending” due to the Israel-Hamas war and “caution among brand advertisers and agencies regarding ad spending during this time.”
The digital advertising market appeared poised for a rebound after Meta, Snap and Pinterest beat revenue expectations last quarter. But Meta shares fell as executives warned of falling advertising spending. “We are subject to strong volatility in the macro landscape,” Chief Financial Officer Susan Li told investors during a call. The revenue outlook for 2024 is “uncertain,” she said.
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