MW Trade Desk's stock may see its worst drop ever, and analysts wonder if Amazon is to blame

By Emily Bary

Some say newfound competition is pressuring Trade Desk's growth, but the ad-tech company's CEO says Amazon is limited because it competes against marketing customers

Amazon, which operates Prime Video, is making inroads in connected-TV advertising.

The world of advertising technology is getting more competitive, and that seems to be weighing heavily on Trade Desk Inc.'s stock Friday.

Specifically, analysts are worried about Amazon.com Inc.'s (AMZN) growing stature in the digital-advertising landscape, as the e-commerce and cloud powerhouse seems to be gaining steam with its demand-side platform, which is a place where marketers can buy ad inventory.

"First and foremost, the Amazon shadow over this stock is now front and center... and harder to deny," MoffettNathanson's Michael Nathanson wrote in a note to clients Friday.

While Trade Desk (TTD), which plays into ad tech for connected TV and other areas, beat expectations with its latest quarterly numbers, revenue growth slowed and could slow even further in the current quarter based on the company's guidance. The prospect of further sluggish growth ahead is dimming the stock's "valuation halo," according to Nathanson, and shares are falling more than 36% shortly after Friday's open.

The move would make for the stock's largest drop on record if it holds through the close.

See also: Trade Desk's stock tumbles after earnings. Are investors being too harsh?

Trade Desk has been riding a wave of robust industry growth in connected TV, but now more companies are getting in on that action.

"Fast growth in CTV hasn't disappeared entirely, but it has shifted toward newer entrants, namely Amazon, Netflix, and Disney+, each of which is expected to grow ad revenue at a 30%+ [compound annual growth rate] over the next three years," Nathanson wrote, as he cut his rating on Trade Desk's stock to sell from neutral.

Trade Desk "can only access inventory from Disney+ and Netflix, where Netflix's appetite to control its own ad destiny remains a gating factor," he added.

Wedbush's Scott Devitt keyed in on the competitive issues as well, noting that improvements to Amazon's offerings seem to be captivating some marketers.

"Amazon is now unlocking access to traditionally exclusive 'premium' ad inventory across the open internet, validating the strength of its DSP" - or demand-side platform - "and suggesting The Trade Desk's value proposition could erode over time," Devitt wrote.

Meanwhile, Trade Desk is making big investments of its own, but that could pressure profitability this year. Devitt now expects the company's margin on adjusted earnings before interest, taxes, depreciation and amortization will contract by about 175 basis points this year after it expanded by roughly the same amount last year.

The potential for margin pressure "adds fuel to the fire," Devitt added, as he downgraded Trade Desk's stock to neutral from outperform on "a slower long-term trajectory and the potential need for elevated investment to support growth if the company's competitive position were to be challenged further."

The Amazon issue came up on Trade Desk's earnings call, with Chief Executive Jeff Green saying he was "hoping somebody would ask this question."

In his view, Amazon isn't a true competitor to Trade Desk because the company competes "with a tiny division of Amazon." Meanwhile, he said Trade Desk's independence should stand out to marketers.

"A scaled independent DSP like The Trade Desk becomes essential as we help advertisers buy across everything and that we have to do that without conflict without compromise," he said.

He added that "Amazon already competes with many of the world's biggest advertisers in categories like retail, [consumer packaged goods] and cloud, which makes it difficult for those brands to fully trust them as a partner."

-Emily Bary

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August 08, 2025 09:47 ET (13:47 GMT)

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