The advertising technology firm The Trade Desk has encountered a significant new challenge in what has already been a difficult year. In a move that underscores its recent struggles, the company is being removed from the prominent Nasdaq-100 Index. While index rebalancing is a routine process, the context of this exclusion reveals deeper issues. The stock has lost approximately half its value since reaching a peak of $139.51 in December 2024. The official removal, scheduled for December 22, 2025, will cut off a steady stream of demand from funds that passively track the index.
Growth Slowdown and Margin Pressure Fuel Decline
The dramatic share price depreciation stems from a confluence of disappointing forward guidance and contracting profitability. For Q1 2025, management projected revenue growth of at least 17%. Although this figure appears robust in isolation, it represents a sharp deceleration from the company’s historical performance, which averaged 36% annual growth between 2016 and 2024.
Perhaps more concerning is the forecast for adjusted EBITDA, which is expected to decline by roughly 10% in the upcoming reporting period. This erosion in margins has prompted analysts to reassess their valuations. On December 14, Wedbush Securities maintained its “Neutral” rating but slashed its price target to $40, offering minimal upside from the current trading level of $37.26.
Compounding these financial headwinds, The Trade Desk received a notice from Nasdaq on December 16 for a rule violation. Although specific details were not disclosed, the timing of the reprimand further dampened market sentiment.
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Divergent Moves Among Institutional Investors
The institutional investment community is sending mixed signals, reflecting a lack of consensus on the stock’s outlook. On the selling side, Zevenbergen Capital notably reduced its stake on December 20. Thrivent Financial also divested shares during the month.
Conversely, other major players are viewing the weakness as a buying opportunity. The Czech National Bank initiated a new position in The Trade Desk on December 21. On the same day, Assenagon Asset Management purchased 128,449 shares. These contrarian investments suggest some professional investors consider the stock undervalued following the steep sell-off, which the index exclusion may have exacerbated. The shares currently trade at a forward P/E ratio of around 27.
Navigating a New Reality Without Index Support
The expulsion from the Nasdaq-100 eliminates a reliable source of institutional buying pressure. Passive index funds are now forced to liquidate their holdings. Consequently, the equity will depend solely on the decisions of active fund managers and retail investors to maintain its price near $37. With a year-to-date loss of 50%, slowing growth metrics, and regulatory scrutiny, The Trade Desk approaches year-end under significant pressure. Whether the recent institutional purchases mark a turning point or merely a temporary rebound will become clearer in early 2025 when the company releases its quarterly results.
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