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April 30, 2024

Trade Idea: TTD $84.50 (The Trade Desk)

Buy May 10th $90 Calls for $3.20

TI TTD chart Winning Picks 043124

The Trade Desk (TTD) screamed higher after positive earnings on February 16th. At one point, the stock was up 25%. This caught my attention.

Like the CEG earnings presentation I showed you last month, this TTD earnings presentation on February 15th is a great read if you want to learn about the advertising business and the shifts/trends currently at play.

That said, The Trade Desk (TTD) is an expensive but interesting advertsiing company. They are the leading independent demand-side platform (DSP) competing against the likes of Google, which has its pros and cons.

The CEO Jeff Green built TTD on the premise that all advertising should be done on an exchange where everyone can bid in the process. Currently, there are a very large “walled gardens” like Google, Facebook, and Snap to name a few where advertisers are held within each companies walls. TTD helps advertisers outside those walls.

What are DSPs?

Here’s a good simple version of the ad world where you have demand-side platforms (DSP) and supply-side platforms (SSP).

TI TTD DSP chart Winning Picks 043124

DSPs like TTD help advertisers place their ads in different locations trying to get them the best returns on their ad spend.

The TTD advantage

On one side, TTD does business with all of the Fortune 500 companies. On the other side, they have created partnerships with publishers (Amazon, Disney, Hulu, etc) to effectively bypass the SSPs.

These partnerships (provide inventory supply) along with new user-data technology gives them an advantage with their ad clients (demand) through better spend results.

For example, on March 20th Disney chose Google and TTD as partners for their launch, DRAX Direct. This is Disney’s new ad exchange where they combine their inventory across Hulu and Disney+.

This was a big win for TTD that pushed the stock over 10% in a week.

Now, the CEO believes another big opportunity is Audio. He thinks that industry is going through a similar experience that the Connected-TV customers have gone through over the last few years – offering ad-based susbcriptions or no-ads.

Essentially, TTD has become a great “middle-man” which is growing revenues at over 20% per year.

Options Flow

On March 18th, 2 days before the DIS announcement, someone came in to buy 3,100 TTD June 21st $105 Calls for $1.30 with the stock $78.75. On the day of the announcement and the stock trading $82.75, they bought another 1,700 more for $1.95.

There’s been nibbling on the upside over the last week. On Monday, someone bought 1,000 TTD May 10th $94 Calls for $2.15.

That last move on earnings shows how fast/high the stock could move. Consider the advertising comments we’ve heard from Google, Snap, and Meta, the industry appears to be doing well.

The Trade

Here’s a longer term chart to give you some perspective.

TI TTD weekly chart Winning Picks 043124

The stock started it’s run from $15 after Covid hit and ran to $95. It was a high-flyer that was running before it learned how to walk. “Expensive” in 2021 would be nice, it was more of a “fantasy” back then.

The Company has spent the last 3.5 years being good at what it does, executing, and building out their business. Everything needed to grow into their valuation.

Now, they are just “expensive.”

But 20% growth with no long-term debt is nothing to sneeze at. And the CEO sees even bigger opportunities moving forward to drive continued revenue growth.

$90 is a big level.

They release earnings next week on May 8th.

I like the TTD May 10th $90 Calls for $3.20. Target Stock Price is $103.



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Oct. 1st - Dec. 31st

28 Trade Ideas were given during this period with 19 reaching Triple-Digit Returns, or 68%. One Trade Idea is still pending. Of the 9 Trade Ideas that did not reach 100%, 6 of them were Puts.  

+1,351%   TSM Calls
   +738%   IOVA Calls
   +525%   NVO Calls
   +480%   OSTK Call Spreads
   +449%   UBER Calls
   +408%   INTC Calls
   +250%   SPY Put Spreads
   +212%   AEO Calls
   +191%   JPM Call Spreads
   +154%   MGM Calls
   +150%   PYPL Calls
   +132%   MGM Calls
   +129%   LVS Calls
   +120%   GLD Call Spreads
   +115%   KVUE Call Spreads
   +111%   VRT Call Spreads
   +110%   INTC Put Spreads
   +108%   MGM Calls
   +100%   AFRM Calls

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