Commentary

The Trade Desk Raised Its Target Price Range Pre-IPO

It’s an exciting time for demand-side platform The Trade Desk—it’s set to go public on the Nasdaq this week. And, notably, the company amended its public filing with the Securities and Exchange Commission earlier this week to raise its price range from from $14 to $16 per share to $16 to $18 per share.

The company now proposes a maximum aggregate offering price of $96.6 million, up from the $86.3 million it targeted when it first filed its S-1 in August, according to a report in the Business Insider, which notes that The Trade Desk's IPO represents “the first ad tech company to go public since MaxPoint listed in March 2015.”

Revenue for The Trade Desk's revenue was up 155.5% year-over-year to $113.8 million in 2015. The company is also profitable, reporting adjusted EBITDA of $39.2 million, up 589% year-over-year.

The IPO is being underwritten by Citigroup, Jefferies, RBC Capital Markets, Needham, and Raymond James. The company's stock ticker symbol will be "TTD."

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Brian Wieser of Pivotal Research Group weighed in with his thoughts about the impending IPO in a research note: “We expect the stock will trade well above its proposed offering price in the near term. At $14-16, the company’s enterprise value equates to approximately $700 million. We think investors will place a much higher valuation on the company, likely approaching or exceeding $1 billion  in the near term and making it the second most valuable ad tech pure-play after Criteo.”

That’s a bullish prognostication by Wieser. And if, as they say, a rising tide lifts all boats, perhaps other ad-tech companies will fare just as well. Most of these firms are salivating at the prospect of going public no matter how much trouble it is.

Wieser goes on to say: “However, we are also mindful that as clients of The Trade Desk become newly aware of exactly how profitable the business is following the filing of their S1, this relatively concentrated group will probably try to squeeze the fees they pay. These pressures can be offset to some degree as the company expands the domestic volume of business it transacts with existing customers, as it expands the number of customers it works with and as the company expands its international business.”  Wieser noted that competition from Google and Facebook may eventually become a big pressure on The Trade Desk and other ad tech firms that are already public.

In a statement to RTBog, Rocket Fuel CEO Randy Wootton weighed in on the impending IPO by asserting that the future for successful ad tech and martech companies is in “marketing to individuals in the moment, which requires the technical infrastructure to handle petabytes of data, the artificial intelligence capabilities to make decisions in real time, and the historical knowledge to better inform future decisions.”

He said that understanding people requires a “big data investment in an owned-and-operated cross-device graph, which we have built with our own technology. These aren’t capabilities that can be flipped on with a switch—they take years of investments and long-term commitments.”

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