IPO Quiet Period Expiration: The Trade Desk

| About: The Trade (TTD)


The IPO quiet period for TTD expires on 10.17; after this point underwriters Citigroup, Jefferies RBC and others will have a first shot at releasing reports.

We anticipate recommendations will be positive, given TTD's strong performance and solid fundamentals.

The event could cause an uptick in stock price.

We recommend buying in prior to the event to take full advantage of impending inclines.


The Trade Desk (NASDAQ: TTD) - Buy Recommendation, Our Price Target $28.10.

The quiet period for the Trade Desk IPO is set to expire on Oct. 17, 2016. This will allow the underwriters of the offering to conduct detailed analyses, make recommendations and release their reports on Oct. 18, 2016. The company has a powerful group of underwriters, and when they are able to release their reports, it is likely to result in at least a temporary boost in TTD share price. The lead IPO underwriters include Citigroup (NYSE:C), Jefferies and RBC Capital Markets. The co-managers for the offering are Needham & Company and Raymond James.

We recommend that investors consider making allocations before the quiet period expiration in order to take advantage of the upcoming event. This catalyst builds on the company's strong growth trajectory.

Business overview: Provider of technology platform for advertising buyers

The Trade Desk describes itself in its filings as a technology company that provides a platform for advertisers to purchase online advertisements. Its customers are able to customize the ads and then share them with their chosen target customers. The company was founded in 2009 and is based in Ventura, California. Its goal is to improve advertising and the monetization of media through allowing ad-buyers to have one-to-one customized interactions with potentially billions of people.


See our IPO preview of the deal for additional details.

Financial overview

For the six-month period that ended on June 30, 2016, the Trade Desk reported that it had net revenues of $77,560,000 and a net income of $6,558,000. For the first six months of 2015, the company reported net revenues of $42,410,000 and a net income of $5,674,000.

The company's IPO opened 60 percent higher than its pricing of $18 per share, opening at $28.75. It close for trading at $25.52 on Oct.11.

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The Trade Desk has described its intention to use the net proceeds from this IPO for funding and expanding its business/marketing programs, along with general corporate purposes and working capital. The company will also pay a $750,000 fee to a lender post-paying off a line of credit.

Management Highlights

Jeff T. Green has served as the company's chief executive officer, president and as a board member since Nov. 2009. Before joining The Trade Desk, Green founded AdECN, which was the first online ad exchange in the world. Green has previously advised Microsoft (NASDAQ:MSFT) on its roll-out program and has served on the network and exchange quality assurance committee for the Internet Advertising Bureau from 2011 to 2012.

David R. Pickles has served as the company's chief technology officer since March 2010. His career has been spent building internet delivery systems. Pickles holds a Bachelor of Science in computer science from the University of California, Santa Barbara.

Competitors: Google, Amazon, Others

TTD faces competition from large internet companies that provide ads to customers, including industry behemoths such as Google (NASDAQ:GOOGL) and Amazon (NASDAQ:AMZN). It also faces competition from smaller competitors that offer advertising to customers. The company's P/E of 30.7 is slightly higher than Google's at 30.52 and well below that of Amazon at 207.99.

Smaller industry peer CDK Global (NYSEARCA:CDK), which provides IT and digital marketing solutions to the automotive industry, also has a higher P/E of 37.31; while the two companies differ, TTD still appears attractive in this pool.

Conclusion: Buy shares

The Trade Desk has demonstrated growth year-over-year and opened much higher than its proposed IPO price. The stock has since calmed slightly but is still trading well above its original price.

The underwriters for the company are likely to cause a boost in TTD's share price upon the release of their detailed positive reports after the quiet period expires. (See our firm's research highlighting above-market returns of 3% in a period of time (-5,+2) days surrounding the event day (0)).

Again, we recommend that investors consider purchasing TTD shares in advance of the expiration to take advantage of event.

Disclosure: I am/we are long TTD.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.