It’s a little less sunny in California these days – at least as far as The Trade Desk is concerned.
The Ventura-based independent DSP is less than a third as valuable as it was a year ago. It retains about one-tenth of its high-water market cap from December 2024, when the company was worth almost $70 billion. TTD is also slated to be removed from the S&P 500 on Sept. 21 and bumped to the S&P SmallCap 600 instead.
Relatedly, last week, CEO Jeff Green announced a 15% companywide layoff following a disappointing Q3, when The Trade Desk lowered its earnings forecast for the rest of the year.
The most important question for The Trade Desk is this: Why is this happening?
The DSP contender POV
For one, there is a squadron of challenger DSPs claiming shares of The Trade Desk’s pie.
Another publicly traded indie DSP, Viant, has seen its share price grow by 30% in the past year. Then there are the likes of Pontiac Intelligence, as well as smaller specialists like AdQuick (which focuses on out-of-home media buying) and DeepIntent (which caters to health care) that are looking to syphon away some of TTD’s business.
Challenger DSPs like Pontiac and Viant are standing out due to their focus on CTV. The strategy makes sense partly because CTV is where there’s faster growth and greater CPMs to be had. But going after CTV budgets is also a cost-management decision. Smaller and newer DSPs aren’t interested enough (and can’t afford) to monitor all the open web’s display impressions.
Meanwhile, every single time The Trade Desk considers an impression, a vast, incredible machine with purview across thousands of data suppliers and vendor partners must whir into action – even when the DSP decides not to bid.
TTD’s all-encompassing insight into the bidstream has long been one of its differentiators, as it has helped the DSP to avoid query-filtering algorithms that SSPs use with other DSPs to manage their own expenses.
It has also given the company heft to win key customers. One timeline-changing example came in 2020, when TTD won the Walmart DSP business from Xandr, where employees at the time bemoaned that they couldn’t compete on even bake-off conditions because TTD paid to see so much more of the web.
But a startup DSP like Tuple, which launched this year, doesn’t even operate like a normal DSP. It’s embedded in the SSP’s infrastructure. And rather than span the vast ecosystem of ad tech and mar tech partners, Tuple Founder and CEO Doug Lauretano told AdExchanger he envisions a sweet spot of about three SSP partners in total.
So, while The Trade Desk hasn’t changed its approach to scouring the web, other DSPs argue the strategy that once made TTD a heavyweight now just seems like bloat.
The real problem
For The Trade Desk, the naysayers and rivals who kick them when they’re down are a form of praise, like smack talk lobbed at an opposing team’s star player.
But the disillusioned response from investors is more akin to the ice-cold, piercing stare of a disappointed parent.
“We never thought we would see a quarter and guide in a US election and World Cup-year like the one the Trade Desk just shared for 2Q 26,” wrote Michael Nathanson, a senior research analyst at MoffettNathanson, in an investor update last month.
The Trade Desk doesn’t disclose its channel performance, Nathanson added, so it’s not plain where its declines are coming from.
But investors almost never cite competition from third-party ad tech vendors as a concern. Instead, they seem more responsive to other investors getting cold feet about a company.
“You could argue that when the stock was at its highs, it reflected a true definition of ‘capital,’ or goodwill that investors projected onto Jeff Green,” Brian Wieser, a longtime ad tech equity analyst who now runs the advisory consulting firm Madison and Wall, wrote in an email to AdExchanger. Now, he added, investors no longer give The Trade Desk the benefit of the doubt.
And, although investors don’t sweat competition from ad tech upstarts, they are highly aware of market pressure from Big Tech platforms.
While The Trade Desk was able to grow for years by taking share from other third-party DSPs, Wieser said, it hasn’t successfully expanded its market by winning share from walled gardens or increasing programmatic’s portion of agency spend.
Nathanson, for one, doesn’t beat around the bush: “It should be clear to any investor with a pulse that the open web is losing tremendous market share to the mighty three walled gardens of Google/YouTube, Meta and Amazon,” he wrote.
Amazon is generally considered the apex predator for The Trade Desk’s budgets right now, according to Dan Salmon, partner and US internet research lead at the equity research boutique New Street. But he told AdExchanger that a more dangerous long-term threat might be the development of agentic platform products that leapfrog DSPs – namely, Google’s Buyer Direct.
Simply put, Buyer Direct or platforms like Amazon Web Services that directly connect advertisers and media companies could disintermediate The Trade Desk, Salmon said.
With that potential outcome in mind, investors are rethinking the ad tech sphere entirely, he said, with newfound concerns around “threats to the DSP as a form of media buying to start with.”
Some investors, including Salmon, were also mightily peeved last year when Green retained his super-majority control of the company.
Now that The Trade Desk’s market cap is below $10 billion and it might be considered a potential opportunistic acquisition, investors might cushion its value against the possibility of any such deal. (This isn’t an academic concern, by the way. Criteo has been fending off predatory takeover attempts since its shares slipped to $1 billion.)
But since Green has complete control over any decision to sell the company – and investors doubt he’s inclined to sell – there has been no slight bump in TTD’s stock even from the possibility of a deal, Salmon noted.
And it appears The Trade Desk can’t even win any points with investors by getting more active in high-growth channels, like its smaller DSP rivals have.
Nathanson wrote in his TTD investor note last month that he’s now skeptical that even CTV will continue to grow for the company. “Here is why: due to the massive consolidation of CTV participants, the market is now coalescing around five fully-scaled participants: YouTube, Disney, Amazon, Netflix, Fox/Roku, Paramount/WBD.”
Once again, investors are increasingly dubious of independent, third-party ad tech, while their confidence grows in big, media-owning ad platforms.
And the relationship between ad agencies and third-party ad tech is another source of concern.
After all, more agencies are opting to work directly with media owner-sellers in favor of using a DSP, as Nathanson also pointed out.
“It might not be tomorrow,” he wrote, “but there is a strong incentive for both sides of the market to automate this badly inefficient market structure and bypass middlemen.”
