Is The Trade Desk, Inc. (NASDAQ:TTD) Potentially Undervalued?

Let's talk about the popular The Trade Desk, Inc. (NASDAQ:TTD). The company's shares saw a double-digit share price rise of over 10% in the past couple of months on the NASDAQGM. With many analysts covering the large-cap stock, we may expect any price-sensitive announcements have already been factored into the stock’s share price. But what if there is still an opportunity to buy? Today I will analyse the most recent data on Trade Desk’s outlook and valuation to see if the opportunity still exists.

Check out our latest analysis for Trade Desk

Trade Desk appears to be overvalued by 39% at the moment, based on my discounted cash flow valuation. The stock is currently priced at US$75.91 on the market compared to my intrinsic value of $54.78. This means that the opportunity to buy Trade Desk at a good price has disappeared! But, is there another opportunity to buy low in the future? Given that Trade Desk’s share is fairly volatile (i.e. its price movements are magnified relative to the rest of the market) this could mean the price can sink lower, giving us another chance to buy in the future. This is based on its high beta, which is a good indicator for share price volatility.

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. With profit expected to more than double over the next couple of years, the future seems bright for Trade Desk. It looks like higher cash flow is on the cards for the stock, which should feed into a higher share valuation.

Are you a shareholder? TTD’s optimistic future growth appears to have been factored into the current share price, with shares trading above its fair value. However, this brings up another question – is now the right time to sell? If you believe TTD should trade below its current price, selling high and buying it back up again when its price falls towards its real value can be profitable. But before you make this decision, take a look at whether its fundamentals have changed.

Are you a potential investor? If you’ve been keeping an eye on TTD for a while, now may not be the best time to enter into the stock. The price has surpassed its true value, which means there’s no upside from mispricing. However, the optimistic prospect is encouraging for TTD, which means it’s worth diving deeper into other factors in order to take advantage of the next price drop.

If you'd like to know more about Trade Desk as a business, it's important to be aware of any risks it's facing. For example - Trade Desk has 1 warning sign we think you should be aware of.

If you are no longer interested in Trade Desk, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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