What Happened?
Shares of digital advertising platform The Trade Desk (NASDAQ: TTD) jumped 2.6% in the morning session after reports showed that Cathie Wood's ARK Investment funds bought a significant number of shares in the company. Disclosures from the investment firm revealed the acquisition of 204,354 shares, a purchase valued at approximately $7.9 million. This move highlighted ARK's strong confidence in the company's growth potential within the evolving online ad market. The investment followed recent company reports of an 18% year-over-year revenue increase in its third quarter, which was driven by strong digital demand and innovations on its data-driven ad-buying platform.
After the initial pop the shares cooled down to $40.70, up 3.5% from previous close.
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What Is The Market Telling Us
The Trade Desk’s shares are very volatile and have had 26 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 14 days ago when the stock gained 2.9% on the news that comments from a key Federal Reserve official bolstered hopes for an interest rate cut. The positive sentiment followed comments from New York Federal Reserve President John Williams, a voting member of the rate-setting Federal Open Market Committee (FOMC), who indicated he sees room for further policy easing. Following his remarks, the probability of a December rate cut surged from 39% to 71%, according to the CME FedWatch Tool, causing Treasury yields to fall. Lower interest rates can be particularly beneficial for growth-oriented sectors like software, as they increase the present value of future earnings. This renewed hope provided a boost to the sector, which had recently faced pressure from concerns over high valuations in artificial intelligence.
The Trade Desk is down 65.4% since the beginning of the year, and at $40.70 per share, it is trading 70.7% below its 52-week high of $139.11 from December 2024. Investors who bought $1,000 worth of The Trade Desk’s shares 5 years ago would now be looking at an investment worth $445.92.
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