The Trade Desk, Inc. TTD stock plummeted 15% in after-hours trading on Wednesday, even after reporting strong fourth-quarter and full-year 2025 results. Investors focused on its weaker first-quarter guidance, leading to the sharp selloff and extending the stock’s rough stretch over the past year. From an investment perspective, however, does this drop present a buying opportunity? Let’s examine in detail –
TTD Delivers Strong Quarter as Profitability and Retention Shine
The Trade Desk reported solid fourth-quarter 2025 results, with adjusted earnings per share at $0.59, ahead of the $0.58 estimate. Net income increased to $187 million from $182 million a year earlier. Revenues came in at $847 million, up 14% year over year, surpassing Wall Street’s $841 million estimate.
For full-year 2025, the ad tech company posted net income of $443 million, up from $393 million in 2024. Annual revenues were $2.9 billion, up 18% year over year, according to the company’s investor relations website.
Jeff Green, CEO of The Trade Desk, confirmed that the company generated revenue growth along with “significant profitability and cash flow.” Management further confirmed that the ad tech company retained 95% of its customers in 2025, as it had in the previous 12 consecutive years, indicating strong customer satisfaction. Additionally, the company repurchased $1.4 billion worth of shares in 2025, showcasing management’s confidence in the business.
The Trade Desk Faces Margin Pressure and Near-Term Uncertainty
Not everything in The Trade Desk’s fourth-quarter report was encouraging. Net income margin declined to 22% from 25% a year earlier. The full-year net income margin fell to 15% from 16% in 2024, indicating modest pressure on profitability.
Looking forward, the ad tech company expects first-quarter 2026 revenues of $678 million, highlighting decelerating revenue growth compared with the prior quarter. Also, the projected adjusted EBITDA of $195 million suggests that margins will be lower than in the fourth quarter. Anyhow, the ongoing stock-based compensation may reduce margins over time.
The Trade Desk, meanwhile, is also navigating leadership issues. While this may not have a lasting impact on the company’s long-term performance, in the short run, it is denting investors’ sentiment. The company is currently operating with an interim CFO as it continues its search for a permanent replacement.
Here's How to Trade TTD Stock Now
Despite The Trade Desk’s strong fourth-quarter and full-year 2025 earnings and revenue growth, its margin pressure, slower near-term growth outlook, stock-based compensation impact, and leadership uncertainty make the stock less compelling to buy at the moment, even after the stock has plunged. Moreover, with management citing macro uncertainty, peers like Meta Platforms, Inc. META have offered a more upbeat outlook.
Of course, if the company manages to reaccelerate revenue growth and ease margin pressure, the dip can turn out to be a smart entry point over time. For now, The Trade Desk has a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks Rank #1 (Strong Buy) stocks here.
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The Trade Desk (TTD): Free Stock Analysis Report Meta Platforms, Inc. (META): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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