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Why Trade Desk and Magnite Brought Down the Nasdaq Monday

Is programmatic advertising falling out of favor?

Investors have been having a tough time with the Nasdaq Composite lately. After blockbuster performance in 2020, the growth stock-laden benchmark has often missed out on market rallies elsewhere. On Monday, for instance, the Nasdaq fell 1.25% as of noon EDT, even as some other market indexes rocketed higher to new all-time records.
The Nasdaq has often suffered when important companies have given investors bad news. That was the case on Monday morning, as shareholders in The Trade Desk reacted negatively to the programmatic advertising specialist's latest financial report. Below, we'll look at what The Trade Desk said and why it helped pull fellow ad company Magnite and the
entire Nasdaq lower.

Here's what sent The Trade Desk stock falling:

Shares of The Trade Desk were down more than 20% Monday morning. The company's first-quarter earnings report didn't give investors the reassurances they wanted, and even some other favorable moves didn't get the reaction some
had hoped to see.

The Trade Desk's first-quarter results had plenty of positives on their face. Revenue climbed 37% compared to the year-earlier quarter, with that growth rate accelerating slightly from where it was 12 months ago. Adjusted net income
climbed more than 60% year over year, resulting in earnings of $1.41 per share on an adjusted basis. The Trade Desk kept customer retention rates high at over 95%. Moreover, The Trade Desk sees a bright future. Second-quarter guidance for
sales of $259 million to $262 million was above what most investors had expected. The company even announced a 10-for-1 stock split to become effective next month, which expresses confidence and typically gets a positive reaction from shareholders.

Yet investors didn't seem to appreciate co-founder/CEO Jeff Green's assessment of the results, which he ascribed largely to the success of connected TV. The Trade Desk has become a leader in programmatic ads, but the stock's downward
move shows that strong results simply aren't enough in this environment.

Big gains, big drops:

Other players in the ad space also took big hits. Magnite, which has a similar focus on programmatic advertising but takes it from the sell-side angle rather than The Trade Desk's buy-side emphasis, saw its stock drop 15%. The smaller PubMatic took a 10% hit.

Dealing with volatility is hard, especially when the net impact is favorable overall. The Trade Desk's stock is up 67% over the past year and has jumped tenfold since mid-2018. Any longtime shareholder would be ecstatic about that kind of
return for a stock -- except that just a few months ago, it was much larger. The shares are down 45% from their highs late last year. The same is true of Magnite. The stock has lost half its value since early February. But it's still up 377% over the past year and 1,270% since May 2018.

Continued above..

Earning out after the bell. This is all in sympathy with TTD.

They partner with MGNI on a lot of stuff.

Personally, I am not surprised, even though my shares of MGNI are down over $285,000 at the moment (today's trade. I am still up well over 1.2 million USD). That being said, I truly believe we'll grow into the old valuations over time. We ran way too far, way too fast over here on some of these ad tech stocks, now the pendulum is swinging the other way. I am long, long, long for the next five years, at least, so this really doesn't bother me.

If you don't believe in this sector you've not been paying attention. Or you're too effing stupid to have a clue about what's going on...whatever.

Mal,

TTD down due to cloudy forecast, not stock split.

Stock split is usually a positive for high flyers. It allows smaller investors to more easily buy.

BTW, Milhous,

Your calling our VI a mutt gives mutts a bad name. Being of English, Swiss German and Italian heritage, I am a bit of a mutt, so I take offence at your use of the word to describe our village idiot.

Would those be the fleas that jump off the camels while they're having their way with our village idiot?

Seems fitting.

Hey KPDm,

All's well over here. I trust the same for you.

As long as the technicals line up with the fundamentals, I am on board with the technicals.

Long may our above sector revenue and profitability growth continue.

Top of the morning here in the west coast, USA.

I see numerous posts, and while I've not the time this morning to read them, I get the gist of their intent.

Like most here, I feel this sector is well worth our while. Let's see what our village idiot has to say in one, two, three, and even five years from now. I know where my head is located, along with a substantial amount of my cash, and that's in PERI, TRMR, MGNI, and AcuityAds, with a fair bit in what shall be TBLA, also some in Pubmatic and TTD.

I am betting with my Cash, not cheap, bomb throwing diatribes on an anonymous BB.

Farruggia,

I love the attitude. We also call food "grub". That can be any meal of the day. And all this time I thought that was from the old west / wild west, cowboy days in the USA.

Ha, that just jogged a memory. I well recall when I was young, in the 1960s, visiting relative back east. (New York). They thought we actually had Indians running around scalping people. Seriously, they believed that. That may have been true at one time, but it ended about a century prior, and they weren't the only ones taking scalps.

Milhous et al.

That's pretty complicated.

We keep it simple. Breakfast, lunch and dinner.

OK, now here's where we get a bit more complicated: People needing an excuse to drink at noon on a Sunday often have what's called "brunch", a combo of breakfast and lunch. Usually preceded by and consumed with some sort of alcoholic beverage.

For breakfast I usually eat fruit and some sort of grain. But breakfast cereals for those on the run, or bacon, eggs, toast and hash browns are pretty common for old timers who work hard (physically) for a living.

I've mentioned this several times here, but I've spent a fair bit of time on the Continent. The buffet style breakfasts I've enjoyed at my hotels have been pretty darn good. Notably so.

Crusty,

We have a saying over here: Call me anything you like, but don't call me late for dinner.

That, my friend, truly applies to me. Then again, I am the one cooking the dinner, so that's one event for which I am never late.

(Do you guys call it dinner? If I recall correctly, you use the term "supper" more than in the US.)

Hey Rusty,

Oops. Do not misinterpret my intent in the use of the term pal when describing you. I was not being sarcastic in applying the term to you, as I was in the prior use of the word.

Some say sarcasm is a low form of wit. What the heck, I don't care. I use sarcasm all the time; but I actually prefer to view it as being facetious.

Milhous,

Perhaps you weren't here when we were graced by Edleman's presence. I know for sure all the old timers well recall our pal Ben, especially my pal Crusty.

Not kidding: Edelman cost me more than a couple million USD (closer to 3 million USD). Dude was a paid hit man for hedge funds that were short.

Milhous,

About the DoubleVerify contract:

Can we spell "Ben Edelman"?

Just in case anyone cares. (I find it all interesting. The incestuous nature of our industry is something to ponder.)

https://www.linkedin.com/in/markzagorski/

I wasn't going to mention this, but what the the heck...I couldn't help but notice, from the Forbes article posted on Friday by SNN, the CEO of DoubleVerify is Mark Zagorsky. He worked at Telaria / Tremor Video / Magnite until last July.

Most of the people in this industry know each other, and they also know about each other's companies. The below is from his Bio on LinkedIn, and represents his employment just prior to DoubleVerify, which began July, 2020.

Mark Zagorski

Chief Executive Officer at DoubleVerify

Company NameTelaria (Merged to Form Magnite NASDAQ:MGNI)

Dates EmployedJun 2017 – Jul 2020

Employment Duration3 yrs 2 mos

LocationGreater New York City Area

+ Rebuilt, repositioned and relaunched on the NYSE the business formerly known as Tremor Video by divesting 50% of the business for $50M in cash, investing in the sell-side CTV platform and expanding the leadership team to include OTT/TV experts that aligned with the new positioning.

+ Quadrupled TLRA stock price and drove to successful exit in 2.5 years producing significant shareholder returns and turning around a stock that was depressed for nearly 5 years.

+ Increased platform sales at a a double digit rate helping to drive an enterprise value increase of over 300% and delivering record revenue and EBITDA growth.

+ Expanded the business footprint in APAC, EMEA and North America through selected local investments and strategic M&A.

+ Orchestrated stock buyback that cleared out investor overhang providing a clearer path for shareholder value creation.
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Hey KPDm,

All's well here. Trust the same for you.

Sharenicely noticed the DoubleVerify IPO in a couple posts last week. The CNBC bit and an article in Forbes. Forbes link worth a quick skim.

Crusty,

Don't forget the biggest bumbler of all, Suranga. He bailed and left us "Brian". From the frying pan into the fire with those two.

Eddie,

I am now able to buy TRMR the same as if I were in London. It wasn't like that a year or so ago. I complained about the travails of buying TRMR here many times back then. Long story short, I could only do so a few times per day, for a few minutes each time, during the auctions. It was a total joke. Thank Money that's no longer the case.

Milhous,

I've no idea how well TRMR will do short term when listed in the USA. The fact that we'll do it as an ADR, or an ADwhatever, doesn't help my utter lack of confidence in a big spike to the upside as one often sees with true "Initial" Public Offerings. One thing of which I am as sure as I can be, it won't hurt us. If we keep putting up good numbers, if we keep growing, and especially if we grab market share, this will take off...eventually. It's all about exposure.

I first learned about PERI in October of 2019, and started to nibble the first week of November. I was scratching my head for the next several months (15 or so) about why it was so cheap. (I still am to a degree.) They did have some issues in the past, but mgt. changed, and those issues are behind them ("them" being "us" from my perspective). I owe it to a lack of exposure. The markets aren't as efficient as many believe. We (PERI) were in the fives, then sixes, then fours when I first started to buy. We're now at $16.41, so not all bad. Before the sector selloff a month or so ago, PERI was as high as $28.32 (2 March, 2021). People are now watching the stock, but nothing like those that get a lot of exposure like MGNI. I've no idea why this is so, but it is what it is.

Also, mgt. at PERI are serial sandbaggers. The fact that many US investors are too effing stupid to actually listen to the conference calls of the past, go over the numbers, and get to "know" management, leads them to believe that PERI is a slow grower. We'll see if I am the stupid eff for believing management are sandbaggers, or the others for not realizing they're sandbaggers over the next one to two to three years.

So far I've been right about PERI. And TRMR. That doesn't mean I'll end up being "right" over the long term. Of course, we all end up dead in the end.

Should be "aisle" below.

It pays to proof before one hits the post button.

Americans get into bed with the Chinese to make Money. I suppose that's better than getting into bed with Iran.

We are greedy.

I am greedy.

We love Money.

If we think we can make Money off of a stock, and do so legally, we'll do it. Some have more ethics and morals than others.

Many here tend to have close ties and strong affinity for Israel. I respect and admire the Israelis.

Exposure is key.

BTW: It is pretty well known here, at least to anyone whose memory is longer than a day, that I've been preaching my belief that we're very undervalued relative to most all our peers, except for PERI.

BTW: The dude who did the SA (Seeking Alpha) piece on TRMR also did a piece on PERI. He's so clueless he doesn't even know PERI works both sides of the isle (SSP and DSP) as well as TRMR. Shoddy researcher. There are a lot of really lousy writers for SA. This is a well known fact by many of us who subscribe, including me.