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Longtime readers of my German-language High-Growth-Investing blog, will remember my successful investment in The Trade Desk (TTD) stock. Shortly after its IPO in 2017, I invested in what was then an underdog in the online advertising market (read more here; unfortunately, only available in German). At that time, programmatic advertising was still in its infancy, and few believed TTD could survive as an independent demand-side platform (DSP) alongside the “Walled Gardens” (Google, Facebook, Amazon).
At that time, the company had a turnover of just $300 million and an enterprise value of around $2 billion. With organic growth of over 50% per year, it was trading at an EV/sales ratio of approximately 6.
TTD shares were considered highly speculative. Competition with Google was particularly misrepresented or portrayed far too pessimistically by the few analysts monitoring TTD. This was because TTD never competed with Google in its core advertising business which is Search.
My investment thesis back then was that demand for online advertising outside of “walled gardens” would grow in the long term and that TTD was well-positioned to play a leading role in this highly fragmented market segment.
This thesis proved correct, and I was richly rewarded. Initially, investors underestimated TTD, so investor expectations were repeatedly exceeded over many years. During the pandemic, TTD shares were discovered by a broad range of investors. They suddenly became the subject of much discussion and found their way into the portfolios of many retail investors.
Since its IPO, the company has performed excellently and grown very profitably, increasing revenues from $308 million in 2017 to $2.9 billion in 2025 - a tenfold increase in eight years! Free cash flow rose from approximately $20 million to around $700 million during this period, and the cash flow margin is now around 25%.
The enterprise value of The Trade Desk increased from $2 billion at the time of my investment to nearly $70 billion at the end of 2024, an all-time high. I exited after achieving a ten-bagger at the end of 2021 due to the excessive valuation, thus missing out on even higher profits.
However, it’s impossible to time the market perfectly. Then, in 2025, TTD shares crashed. After a price drop of over 70%, a promising opportunity may arise again for value-oriented growth investors.
