By Elsa Ohlen and Adam Levine

Trade Desk investors were fleeing en masse after the ad-tech company reported second-quarter earnings and guidance more or less in line with expectations but said its revenue growth is expected to slow down in the third quarter.

Possibly spooked by signs of a slowdown and the sudden departure of Chief Financial Officer Laura Schenkein, investors appear to have reacted harshly.

Shares were down 38% to $54.74 in Friday morning trading. The move is set to wipe out more than the stock's 24% gain over the past three months. It is the worst performer and most active stock in the S&P 500 index today.

The company's guidance for revenue of at least $717 million in the current quarter was largely in line with expectations, according to FactSet. However, Jefferies analysts led by James Heaney note that it implies a growth rate of 14% -- a slowdown from the 19% growth observed in the previous quarter.

That likely creates concerns over long-term growth, Heaney said in a late Thursday research note. The analyst has a Buy rating on the stock with a price target of $100.

Trade Desk stock was richly valued, even with its price down 25% this year, heading into earnings. Its price was 13.7 times projected sales for the next twelve months, versus a 6.2 multiple for the Nasdaq 100 index.

Some investors may have decided that the ride is over and looked for the exit.

"When TTD reported 4Q24 results, it missed guidance for the first time as a public company, raising concerns about competitive pressures, execution and whether it could sustain 20%+ long-term growth to support its premium valuation," said Bank of America analyst Jessica Ehrlich in her Thursday note. "While we continue to believe TTD can be a double-digit topline grower, we believe it is challenging to justify the premium multiple it has historically received."

Ehrlich has a $55 price target for Trade Desk, down from $130, and she also downgraded it to an Underperform rating.

As for the cause of the slowdown, there are several potential culprits. Amazon.com could be eating into Trade Desk's market share, however, management says that isn't the case, Jefferies' Heaney noted. Macro-related events are also playing their part, causing Trade Desk's customer base of large companies to be cautious about spending.

Finally, there's an organizational revamp underway as Trade Desk is transforming from an emerging company to one with quarterly sales in the multibillion-dollar range. It was added to the S&P 500 in July this year.

Alongside second-quarter earnings released after the closing bell Thursday, the company announced that CFO Schenkein will be replaced by Alex Kayyal -- a board member who spent nearly a decade at Salesforce in executive roles -- on Aug. 21. The change in executive leadership comes as the company's Chief Operating Officer and Chief Revenue Officer have also been replaced within the last 24 months.

As for the earnings themselves, they appeared solid. Revenue came in at $694 million, ahead of expectations. Adjusted earnings per share were in line with expectations at 41 cents.

"For now investors will continue to debate what's driving the slowdown and when the headwinds will lift," Heaney said.

Trade Desk gives its customers a single dashboard from which they can access ad inventory from numerous digital ad platforms. Instead of buying ads directly from a video streamer or a mobile app platform, advertisers can automate their marketing budgets across all inventory in one interface.

Write to Elsa Ohlen at elsa.ohlen@barrons.com

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

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August 08, 2025 11:22 ET (15:22 GMT)

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