What Happened?
Shares of digital advertising platform The Trade Desk (NASDAQ: TTD) fell 4.2% in the afternoon session after the company reported fourth-quarter results that beat expectations but issued a disappointing financial outlook for the first quarter of 2026.
While its fourth-quarter revenue and adjusted EBITDA for 2025 topped Wall Street's forecasts, investors focused on the weaker-than-expected guidance. The company projected first-quarter revenue of at least $678 million, which fell short of the $688.1 million analyst consensus. More significantly, its adjusted EBITDA guidance of $195 million also missed estimates of $222.4 million. The revenue forecast implied a noticeable deceleration in year-over-year growth to about 10.1%, down from the 14.3% achieved in the fourth quarter. The soft outlook added to existing investor concerns after a few uneven quarters.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy The Trade Desk? Access our full analysis report here, it’s free.
What Is The Market Telling Us
The Trade Desk’s shares are very volatile and have had 28 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 21 days ago when the stock dropped 4% on the news that the "AI replacement" narrative reached a fever pitch following the release of new models from Anthropic and OpenAI. The simultaneous debut of Anthropic's Claude Opus 4.6 and OpenAI's "Frontier" agent platform raised concerns that autonomous agents are no longer just tools, but new operating systems that can cannibalize traditional software. This suggests that specialized applications might be reduced to mere features within frontier models, rendering legacy seat-based licensing models increasingly obsolete. The catalyst is the models' unprecedented agentic power. Opus 4.6’s "software hunting" capability allows it to autonomously audit and patch complex codebases, while OpenAI's Frontier platform bypasses traditional CRM and ticketing interfaces to perform enterprise work directly. By commoditizing sophisticated workflows into low-cost API calls, these releases threaten the recurring revenue of software giants. As AI builds bespoke tools on demand, the market is aggressively repricing the entire software application layer.
The Trade Desk is down 35.7% since the beginning of the year, and at $24.22 per share, it is trading 73% below its 52-week high of $89.76 from August 2025. Investors who bought $1,000 worth of The Trade Desk’s shares 5 years ago would now be looking at an investment worth $300.70.
The 1999 book Gorilla Game predicted Microsoft and Apple would dominate tech before it happened. Its thesis? Identify the platform winners early. Today, enterprise software companies embedding generative AI are becoming the new gorillas. Click here for access to our special report that reveals one profitable leader already riding this wave, it’s free.
