A significant analyst downgrade has sent shockwaves through the market for The Trade Desk shares. Morgan Stanley has slashed its price target for the advertising technology company from $80 to $50, representing a 37.5% reduction, while simultaneously downgrading the stock from “Overweight” to “Neutral.” The investment bank cited mounting concerns about the company’s connected television business segment as the primary reason for this revised assessment.
Market Volatility and Performance Pressure
The timing of this downgrade adds pressure to an already volatile stock. The Trade Desk shares have experienced substantial price swings throughout the year, recording 26 separate moves exceeding 5% in either direction. Currently trading approximately 60% below its yearly peak, the stock has lost two-thirds of its value since reaching its 52-week high of $139.51 in December 2024.
Despite reporting solid second-quarter 2025 results with revenue of $694 million – representing 19% year-over-year growth – the company faces increasing skepticism about its growth trajectory. Weaker-than-expected guidance for the third quarter has further amplified investor concerns about The Trade Desk’s ability to maintain its previous expansion pace.
Structural Challenges in Key Business Segment
Morgan Stanley’s analysis points to emerging headwinds in the connected television space, which has traditionally been a significant growth driver for The Trade Desk. The firm’s strategists identified structural challenges within this segment that could potentially constrain future revenue expansion. The revised price target, which now sits below current trading levels, suggests a fundamental reassessment of the company’s valuation framework and growth narrative.
Should investors sell immediately? Or is it worth buying The Trade Desk?
Contrasting Perspectives Among Analysts
Not all market experts share Morgan Stanley’s pessimistic outlook. Among 34 analysts covering the stock, the majority maintain buy recommendations. The average price target among these analysts stands at $91.62, nearly double the current trading price, indicating significant divergence in market sentiment regarding The Trade Desk’s prospects.
In a positive development, the company recently clarified uncertainty surrounding its partnership with Walmart, confirming that it retains its exclusive relationship with the retailer in the United States. Only in Mexico were adjustments made to their existing agreements.
The critical question facing investors is whether the dramatic price decline already reflects these challenges or if The Trade Desk faces deeper structural issues that could justify further downward movement. As the advertising technology landscape evolves, market participants will be watching closely to see how the company navigates these emerging headwinds in its core business segments.
Ad
The Trade Desk Stock: Buy or Sell?! New The Trade Desk Analysis from February 7 delivers the answer:
The latest The Trade Desk figures speak for themselves: Urgent action needed for The Trade Desk investors. Is it worth buying or should you sell? Find out what to do now in the current free analysis from February 7.
The Trade Desk: Buy or sell? Read more here...
