Does The Trade Desk Fit The Pillars? (Issue #25)
New Section! Here is a little overview of The Trade Desk and you get to vote on whether it is worth a full deep dive or not:
The Trade Desk Inc (NASDAQ: TTD — $32.65bn) is an automatic programmatic marketing company. This means they use computer programs to run automated auctions for online advertising contracts. Then the company uses Unified ID (UID) a replacement for cookies or data mining as forms of customized online advertising. It promotes personal privacy while also maximizing ad efficiency and effectiveness. They broker ads for websites, apps, streaming, and more. This is a tough market to play in—competing with Google and Facebook/Meta—but The Trade Desk have shown their metal and has successfully competed so far.
The company has grown revenue at ~47% on average year/year since 2015. Even better is that margins and FCF (more than doubled year/year) are growing too.
The company has been growing quickly and seems like this growth will only continue. But how does it fit into the Pillars?
Pillars:
Competitive Advantage - UID technology
Fortress Balance Sheet - Not unreasonable amounts of debt
Growth - Average 47% y/y revenue growth
Long-term focus - This sector is just getting started and will improve as an opportunity
Capital Allocation and Operation Skills - The company puts a lot of time and money into UID their biggest advantage
Undervalued In Context - It trades at a high multiple, but not for an ad-tech company
For the Formula One (FWONK) fans, I hope you enjoyed Monza this morning!
I launched paid this week! All the Sunday Updates will stay free, but the bi-weekly deep dives and company forums/discussions will only be available to paid subscribers. You can get a paid subscription for $10/mo the lowest it will ever be. This offer is only available for a few more days.
Portfolio Updates:
No changes or news this week. You can go here to read deep dives on these companies and see the whole spreadsheet.
Fans Of The Pillars:
Meme Of The Week:
Until Thursday,
Soren
Disclaimer: Soren Peterson and Pillars And Profits Newsletter are not responsible for any investment results. This is not financial advice. Always do your own research.