Morgan Stanley downgraded its investment rating on Trade Desk Inc. (TTD.US) from "Overweight" to "Equal Weight" on Wednesday. The investment bank stated that its concerns about the advertising technology company's connected TV (CTV) business are intensifying due to various unfavorable factors.

The bank acknowledged that their previous assessment of the company's growth resilience was incorrect, given persistent execution-level issues, weakness in the open web advertising market, and increasingly fierce competition.

"Trade Desk Inc.'s third-quarter revenue growth guidance of 14% was weaker than expected, reigniting doubts that first emerged during the disappointing fourth-quarter 2024 performance and suggesting continued challenges ahead," Morgan Stanley noted in its report.

The bank's analysts also pointed out that Trade Desk Inc.'s latest performance highlights rising uncertainty amid competitive and structural pressures. They identified several contributing factors, including:

Rising advertiser resistance; Amazon's faster-than-expected expansion of its demand-side platform (DSP) through new partnerships with Roku and Disney; and risks to the company's gross billings (excluding CTV portion), as this segment is exposed to the weak environment in the open web advertising market.

Morgan Stanley stated that fundamental uncertainty, challenging year-over-year comparisons in 2026, and headwinds in the open web advertising market lead them to believe that Trade Desk Inc.'s stock has limited upside potential, with risks and rewards becoming balanced.

The bank cut its target price for Trade Desk Inc. from $80 to $50, implying nearly 4% downside from current levels.