Research Note: TTD Is Trading Near Multi-Year Highs. Can It Keep Going?

LikeFolio data suggests yes.

Here’s why…

1. TTD Boasts the Happiest Users in LikeFolio's Universe

TTD (The Trade Desk) has the highest sentiment levels in LikeFolio’s universe, with 80% positive user feedback.

This surpasses major competitors like Adobe, Google, and Perion. High user satisfaction indicates continued adoption and loyalty, which can drive sustained performance and growth.

2. Advertising Expected to Accelerate in the Second Half of 2024

The advertising market is set to surge in the latter half of 2024, propelled by significant events like the U.S. presidential election and the Olympics.

The presidential election alone is forecast to contribute approximately $11 billion to the incremental ad spend, leading to a major boost in advertising demand.

Dentsu (a major ad-buying firm) predicts global ad spend growth at 5.0% for 2024, up from 3.3% in 2023, reflecting improved prospects in key markets such as the US, Japan, Germany, and France. This increase reflects upward revisions from levels initially forecast in December, based on strengthening outlooks in these major markets.

Ad spend growth is now expected to match or outpace GDP progression in all twelve of the biggest ad markets in 2024. This means that the growth in advertising expenditure will be on par with or exceed the economic growth rates (GDP growth) of the largest advertising markets, indicating robust investment in advertising relative to the overall economic activity.

3. Strength in Digital and Connected TV Ads

Digital advertising is predicted to grow by 7.4% globally, with Connected TV (CTV) expected to be the fastest-growing medium in 2024.

TTD's expertise in digital and CTV advertising aligns perfectly with these trends.

Traditional TV ad spending continues to decline as advertisers shift budgets to more efficient and targeted CTV options.

Over the past decade, homes with Connected TVs have surged from 50% to 87%, creating a substantial market for targeted advertising. Meanwhile, the number of homes with cable subscriptions continues to decline. Advertisers recognize CTV as a more efficient use of their budgets, allowing them to target individual viewers more effectively.

Furthermore, the expansion of ad-supported tiers in streaming platforms significantly boosts the reach of CTV advertising. Netflix's ad-supported tier, launched in late 2022, gained 23 million subscribers by the end of 2023. Disney+ also saw 50% of new subscribers opting for its ad-supported tier. Although Amazon Prime Video does not use TTD directly for its ads, the overall shift in the industry towards ad-supported tiers—including Amazon's entry into the market—supports the growth of CTV advertising as a whole​.

Bottom Line

TTD’s position near multi-year highs is supported by multiple growth drivers. LikeFolio data, combined with industry forecasts, indicates that TTD is well-equipped to maintain and potentially exceed its current valuation long-term. The growing adoption of CTV and the expected increase in ad spend provide strong tailwinds for TTD's continued success. As more streaming platforms adopt ad-supported tiers, the opportunities for targeted and efficient advertising will continue to expand, benefiting companies like TTD.