2 Reasons to Buy Trade Desk Stock Now and 1 Warning Sign

On Monday, shares of The Trade Desk Inc. (NASDAQ: TTD) closed up nearly 4%. That means they're now up more than 60% from the multi-year low they hit in April, a remarkable run. While the stock still has plenty of ground to make up after its sharp Q1 plummet, investors have to be encouraged by the recovery signs it's showing. 

With summer trading just underway, The Trade Desk is already emerging as a contender for comeback stock of the year.

Still, investors face a choice: Is it time to go all-in on The Trade Desk's rebound, or should caution prevail after such a steep rally? Here are two reasons investors should consider backing up the truck, and one reason to keep some powder dry.

Reason to Be Bullish: $100 Price Targets 

If you're looking for validation of the stock's recent momentum, look no further than last Friday's bullish update from Evercore ISI. The team there upgraded their rating on the tech giant to Outperform, citing robust sentiment around online ad demand, noticeable execution improvements by management, and a solid slate of recent product announcements.

Additionally, Evercore pointed to multiple catalysts that should help The Trade Desk maintain growth near 20% into 2026, excluding political ad spend. These include increased budget allocations to retail media, improved targeting, the upcoming 2026 FIFA World Cup and Winter Olympics, Netflix Inc.'s (NASDAQ: NFLX) continued adoption, and the rollout of the Kokai platform. Even next year's midterm elections offer an additional incremental tailwind for further revenue upside.

Good news for investors weighing up a position is that Evercore is far from alone. Last week, the JMP Securities team also came out bullish, reiterated their Market Outperform rating, and gave The Trade Desk a bullish $100 price target.

From where the stock closed on Monday, that's targeting nearly 40% in additional upside.

Another Reason to Be Bullish: The Technical Setup

Having verged on shifting into an actual downtrend last month, technically, The Trade Desk's picture is now looking increasingly favorable. Following a massive 30% surge after May's earnings, shares began a slow and steady decline, which might have appeared bearish at face value. 

However, the key moment came about two weeks ago when a clear short-term low was established. Last week, the bears attempted another push below that support level, but the dip was quickly bought up. 

This bullish strength suggests significant underlying demand at current prices, and bodes well for the coming weeks. As the bears appear to be losing their conviction, any further weakness, short of an obvious catalyst, will likely be met by even stronger buying pressure. 

Reason to Stay Cautious: Wells Fargo's Downgrade

Yet investors shouldn't completely disregard the bearish viewpoint. Last week, Wells Fargo went against the grain and actually downgraded The Trade Desk from Overweight to Equalweight. They suggested caution following the stock's significant recent gains and argued that much of the upside has already been priced in.

In particular, their update highlighted several competitive concerns, notably the growing threat from Amazon.com Inc. (NASDAQ: AMZN) in digital advertising. Though Evercore sees Amazon's threat primarily impacting Alphabet Inc.'s (NASDAQ: GOOGL) Google, Wells Fargo clearly worries about broader competitive pressure.

This perspective serves as an important check for investors who might be tempted to chase the recent price momentum. Considering the stock already carries a fairly frothy price-to-earnings ratio of 88, even the more bullish investors out there would be wise to keep an eye on competitive dynamics as a critical variable moving forward.

TTD Stock Eyes $75 Key Level Before Potential Gap Fill to $80

That said, Trade Desk's recovery has been remarkable, and the recent bullish updates coupled with the technical setup suggest this rally has legs and further upside potential. However, the caution flag raised by Wells Fargo around valuation and competitive pressures should not be ignored.

It could be an idea to see if the stock can build on Monday's jump and go into the weekend at or above the $75 mark. That would indicate a firm rejection of the bear's attempt to take the stock lower, and could see them start to throw in the towel.

A move towards $80 would likely indicate that the stock wants to close February's gap and return to triple-digit territory.

Where Should You Invest $1,000 Right Now?

Before you make your next trade, you'll want to hear this.

MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis.

Our team has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and none of the big name stocks were on the list.

They believe these five stocks are the five best companies for investors to buy now...

See The Five Stocks Here

The article "2 Reasons to Buy Trade Desk Stock Now and 1 Warning Sign" first appeared on MarketBeat.