• by Wayne Friedman , Yesterday

With more signs of looming Amazon DSP competition for CTV advertising revenues, The Trade Desk, the big independent advertising demand side platform, has seen its stock take another big hit.

Mid-day trading of Trade Desk stock was down a massive 40% on Friday to $53.46. Earlier this year, Trade Desk witnessed a similar large stock drop.

“First and foremost, the Amazon shadow over this stock is now front and center... and harder to deny” says Michael Nathanson, co-founder/media analyst of MoffettNathanson Research.

MoffettNathanson had believed Trade Desk would have more time to prepare for the coming growth of Amazon DSP, but now thinks otherwise and has downgraded the Trade Desk stock to a target price of $45 from $75.

Nathanson says Amazon DSP partnership with Roku coming on later this year, and the debut of new NBA programming on Amazon Prime Video -- as well as the fallout from Omnicom's merger with IPG -- mean plenty of freedom for brands to use a new media buying platform.

The Roku deal announced in June means brands using the Amazon DSP can dramatically increase their reach with more CTV viewers, now on two of major streaming/CTV distribution platforms -- Amazon Fire TV and Roku.

“[All this] will create a much more lethal buying footprint with a likely heavier emphasis on Amazon's DSP, it seems inevitable that Amazon's momentum will become more apparent even to TTD's diehard bulls.”

Nathanson worries The Trade Desk's longtime efforts around transparency and a “open, independent web” versus the “walled gardens like Meta, Google, and Amazon and the ability to leverage AI” will be harmed.

“Why we would not expect them to continue to take share into the future?” he asks.

For its more recent quarterly period, The Trade Desk grew 19% to $694 million in revenue. Next quarter company guidance projects 14% growth to $717 million. For the full year analyst estimates revenues could go up to $2.9 billion for a 17% year-over-year growth.

Focusing on video advertising, MoffettNathanson projects total gross video ad billings -- large CTV platforms and non-CTV digital -- to rise 27% to $7.1 billion this year from $5.6 billion in 2024, and slower growth in 2026 -- 25% to $8.9 billion.

While these sound like still strong gains, Nathanson says: “We see mounting risks. Chief among them: intensifying competition. Amazon is expanding aggressively in the open CTV ecosystem.