The Trade Desk Faces Internal Challenges Amid Agency Spending Freeze

The Trade Desk, a prominent player in the digital advertising technology sector, is navigating a period of significant internal and external pressure. Despite reporting continued double-digit revenue growth, the company is confronting a self-inflicted crisis as several major U.S. media buying agencies have halted their spending through its OpenPath platform. Concurrently, management has initiated a second round of staff reductions within a year, signaling ongoing operational adjustments.

Financial Performance and Strategic Hurdles

For the third quarter of 2025, The Trade Desk posted revenue of $739 million, representing an 18 percent year-over-year increase. However, the transition to its new “Kokai” platform is progressing more slowly than anticipated, even though over 70 percent of client expenditure now flows through it. This slower migration compounds other challenges facing the firm.

Key Financial Metrics:
– Market Capitalization: Approximately $18 billion
– P/E Ratio (TTM): 42.35
– Cash Position: $1.4 billion with zero debt
– Share Repurchases: 6.23 million shares bought back for $375 million

The OpenPath Transparency Dispute

At the heart of the current difficulty is the company’s OpenPath interface, designed to connect advertisers directly with publishers. Multiple large agencies, which typically direct between 10 and 20 percent of their Trade Desk budgets through OpenPath, have suspended payments. Their central allegation is a lack of cost transparency.

Industry experts estimate the actual cost markup via OpenPath to be between 10 and 15 percent—a figure substantially higher than the officially communicated 5 percent publisher fee. This discrepancy has effectively led to a boycott by key agency partners. The situation casts doubt on statements made by CEO Jeff Green in November 2025, when he cited OpenPath growth “in the hundreds of percent range.”

Should investors sell immediately? Or is it worth buying The Trade Desk?

Workforce Reductions Signal Restructuring

In a move underscoring internal cost discipline, the company’s management announced the layoff of 39 employees during a staff meeting on December 17, 2025. While this constitutes less than one percent of its roughly 3,900-strong workforce, it marks the second such reduction within a twelve-month period. Analysts interpret this repeated action as an indication that the integration of internal structures remains a work in progress.

S&P 500 Membership and Analyst Outlook

Since its inclusion in the S&P 500 index on July 18, 2025, The Trade Desk’s shares have been among the poorest performers within the benchmark. With a year-to-date loss exceeding 70 percent, only Deckers Outdoor stock has fared worse within the index.

Despite this severe price depreciation, equity researchers maintain a generally optimistic longer-term view. The consensus 12-month price target from between 33 and 35 analysts ranges from $61.73 to $80.85 per share. This average target implies a potential upside of more than 65 percent from current trading levels.

The company’s upcoming quarterly results will be scrutinized for evidence that it can mend relationships with disaffected agencies and accelerate the Kokai platform adoption. Without clear progress on these two fronts, justifying its current valuation premium may become increasingly difficult for investors.