Last week, our Financial Analyst, Mike, chose The Trade Desk as his first-ever Stock of the Month pick.
This week, Mike sat down with Stock Club Podcast host, James Dunne, to discuss the thesis behind his pick, and give an update on the beleaguered Teladoc in the process. You can find an excerpt of their conversation transcript below.
Is The Trade Desk A Good Buy?
Let’s go to this month’s stock pick, some better news, hopefully. And it is, of course, The Trade Desk. So, similar to Teladoc. Well, actually, maybe not similar to Teladoc right now, but recently similar to Teladoc. The Trade Desk is actually one of the best-performing stocks in MyWallSt shortlist too, up 13 fold since we first picked it about five years ago. I don’t think the Trade Desk has been Stock of the Month though, but with such tremendous growth to date, Mike, what makes you think that now is a good time to pick The Trade Desk as this month of the month?
Yeah, I outlined three kinds of catalysts in the piece that I think have strengthened The Trade Desk investment pieces. But, I suppose the main point of focus, I think, is that Netflix has kind of become the last and largest domino to fall in terms of ad-supported streaming. We went back and forth as well about is this dependent on Netflix becoming a customer of the Trade Desk, or is it becoming a client, or whatever else? But no, what it actually kind of signifies is the next chapter of streaming as a whole. And I just think there’s going to be an influx of cheaper ad-supported options for pretty much any service out there.
And in fact, Reed Hastings has even come out and said that the company has no interest in doing it, the fancy ad matching stuff, which kind of puts billions of dollars of ad inventory on the market for the trade destination. So whether it does take that or not, I think it signifies kind of where connected TV is going as a whole and, like, opening up just a huge new outlet for programmatic advertising. And it’s away from those walled gardens, Google and Facebook and Amazon and Apple and the kind of the big boys who control so much of the industry.
So you think if Netflix goes down this advertiser or advertising-supported streaming if Disney+ does, those other guys, that they’re not going to necessarily find these buyers of advertising space themselves, they’ll go to somebody like The Trade Desk to do it for them.
Yeah. Well, sorry that’s Netflix earning two weeks ago and an awful lot of news came out since. But Reed Hastings basically said that they don’t have much interest in doing it. Yeah. And I think it was surprising because you can see Netflix becoming the next great ad player if they wanted to. But maybe this is how Hastings sees the future of Netflix, like less and less like a tech company or more and more like a studio.
Yeah. Just focus on the content and let somebody else worry about how it gets sold or how money is made from it maybe.
Pretty much, yeah. And then in Disney’s case, it’s already working with supply-side platforms. So Hulu has been adapted for years. So I don’t think especially considering that Disney Plus, I think, targeted late 2022 as the kind of launch of ad-supported stream. I don’t see it changing anything or developing an ad platform at the time.
Yeah, absolutely. I thought another interesting part of your Stock of the Month report was kind of this conversation that we’ve been having over and over again about increased Privacy and IDFA that Apple rolled out, which has basically upended the digital advertising industry, the likes of Facebook and Google. I get the sense, though, that there are still a lot of companies out there with big marketing budgets, and if they can’t put that money towards targeted advertising in apps and on web, this could be a benefit to a company like The Trade Desk, that more money than has before might stream towards there with lack of better options.
100% yeah. Like, we’ve seen what happened with Facebook in the last year. It got cut in half because of these measures. And then in terms of I think we’ll focus on connected TV, for now, that doesn’t rely on third-party cookies or IDFA Identifier for advertisers. You can still provide like a very targeted experience for ad buyers. So it was already the Trade Desk’s number one growth driver for the coming years before Netflix made the announcements. So this loaning will go on to strengthen it more. And Anne Marie, I know there’s a bit where I’ve added a few links, I think, in the show notes or whatever, for people to keep going, Anne Mariee sent me a video from TikTok, and it’s actually incredible. Now ad slots. Peacock is a pioneer. There are ad slots within the TV shows you’re watching that are up for grabs and you can customize them. The video explains it a lot better than I can here, but it just shows the kind of places where connected TV is going. And I think it’s going to be one of the bigger shifts in the advertising industry in the coming years, for sure.
Financial Analyst at MyWallSt
Michael's first and favorite stock is Square, which he sees becoming a massive player in the payments industry and a leader in the war on cash.