Should You Buy The S&P 500's Worst-Performing Stock in 2025?

The Trade Desk has plunged 66.2% year-to-date through Dec. 9, making it one of the S&P 500's worst performers after a rare revenue miss in Q4 2024 and an expected 2025 slowdown to roughly $2.89 billion in revenue (about 18.2% growth) with adjusted EPS growth of only ~7.2%, pressures amplified by executive turnover and heavy investment in new products such as Audience Unlimited, Deal Desk and OpenPath. Investors also fear competitive encroachment from Amazon’s DSP—which is undercutting fees (reported as low as 1% versus Trade Desk’s 12–15%) and leveraging proprietary inventory—though CEO Jeff Green argues Trade Desk’s neutrality across the open internet gives it a durable edge. With the stock now trading at roughly 22.1x this year’s adjusted EPS and 18.9x next year’s, management buying back stock, and core market-position questions unresolved, the situation presents a potentially attractive risk-reward for buyers if the company’s investments arrest the deceleration, but downside remains if margin and growth pressures persist.

Analysis

The Trade Desk has plunged 66.2% year-to-date through Dec. 9 and recorded its first revenue miss in 33 quarters in Q4 2024; that Q4 still posted >22% revenue growth but management's 2025 outlook implies revenue of roughly $2.89 billion (about 18.2% growth) and adjusted EPS growth of ~7.2%, representing an ~8-percentage-point deceleration versus 2024. The stock entered the year trading near 71x adjusted EPS, so the combination of slower top-line growth and margin compression materially reduced the company's valuation buffer.

Weakness reflects a mix of company-specific and structural factors: heavy investment in new products (Audience Unlimited, Deal Desk, OpenPath), elevated executive turnover (CFO, COO, CRO replaced since March), and intensified competitive pressure from Amazon's DSP, which leverages proprietary inventory and is reported to undercut fees (as low as 1% vs. TTD's 12–15%). CEO Jeff Greene argues TTD's neutrality across the open internet is a durable differentiator, but that thesis requires proof of sustained monetization outside walled gardens.

Shares now trade at ~22.1x this year's adjusted EPS and ~18.9x next year's, valuations that appear to price in significant risk while management's buybacks are beginning to reduce share count and support EPS. The outlook is binary: further deceleration and fee compression could drive more downside, whereas demonstrable revenue/margin recovery and customer retention from new products would support a substantial rebound; near-term investors should therefore prioritize near-term execution metrics as primary catalysts.

Key Decisions for Investors

• Consider a small, staged position at current multiples given the share-price drawdown and active buybacks, but size exposure conservatively because execution and competitive risks remain elevated.
• Await confirmatory signals—sequential revenue acceleration, margin stabilization, or improved customer retention—before materially increasing exposure.
• Monitor KPIs closely: client count and churn, advertiser spend per client, realized fee rates versus Amazon DSP, and progress on monetizing Audience Unlimited and direct-deal products; use changes in these metrics as trade triggers.
• If already long, consider hedging downside or trimming the position until at least one quarter validates the new-product revenue trajectory or management turnover stabilizes.