A newly announced partnership between two tech behemoths has sent shockwaves through the advertising technology sector, creating significant headwinds for specialized player The Trade Desk. Amazon and Netflix revealed a strategic collaboration that will allow advertisers to purchase Netflix ad inventory directly through Amazon’s demand-side platform, commencing in the fourth quarter of this year.
This development strikes at the core of The Trade Desk’s business model, particularly within the highly profitable connected television advertising space. The alliance effectively creates a competing ecosystem for premium streaming ad placements, challenging The Trade Desk’s position in this critical growth market.
Market Reaction and Performance Concerns
Investors responded swiftly to the competitive threat. The company’s shares experienced a dramatic decline, shedding over 13% of their value within a single week. This performance puts The Trade Desk on track to potentially become one of the worst-performing stocks in the S&P 500 index for the year.
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Beyond these external challenges, the company faces internal growth concerns that have further unsettled the market. While The Trade Desk reported strong second-quarter 2025 results with revenue climbing 19% to $694 million, the company’s own guidance for the third quarter projects a growth rate of approximately 14%. This noticeable deceleration has raised questions about the company’s near-term prospects.
Analyst Response and Financial Metrics
The growth forecast revision prompted immediate action from Wall Street analysts. Morgan Stanley adjusted its rating on the stock from “Overweight” to “Neutral” while simultaneously implementing a significant reduction in their price target. Financial metrics beyond revenue growth also showed signs of pressure, with the company’s adjusted EBITDA margin declining year-over-year from 41% to 39%.
These developments represent a critical test for the advertising technology specialist. After years of enjoying premium valuation multiples, The Trade Desk now confronts a dual challenge: increasingly powerful competition from industry giants and moderating internal growth momentum. How the company navigates this complex landscape will likely determine whether its stock can recover from its recent substantial decline.
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