$10,000 in The Trade Desk on Its First Trading Day Is Still Worth About $40,000. Can the Stock Recover Again?
$10,000 in The Trade Desk on Its First Trading Day Is Still Worth About $40,000. Can the Stock Recover Again?
Daniel Sparks, The Motley FoolTue, October 20, 2026 at 8:02 AM UTC
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Image source: The Motley Fool.How does a stake that once passed $460,000 wind up back around $40,000?Key Points -
The Trade Desk's yearly revenue rose around 12-fold from 2016 to 2024.
Earnings per share for the past 12 months are higher than they were at the stock's December 2024 peak.
Since The Trade Desk's first trading day, the S&P 500 with dividends reinvested has done a little better.
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Anyone who bought The Trade Desk(NASDAQ:TTD) on its first day of trading and hung on has seen the stock climb over 40-fold, then give most of it back. The ad tech company's shares finished that first day, Sept. 21, 2016, at $30.10 -- or around $3.01 adjusted for the 10-for-1 stock split in 2021.
At $3.01 a share, $10,000 bought around 3,322 shares. At the stock's $12.23 close on Oct. 16, these shares are worth around $40,600. Put simply, the stake is still worth about four times what it cost, though the stock trades 91% below its December 2024 peak of $139.51.
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At that peak, the same stake was worth around $463,000.
But the company held up on the way down, at least until this year. Actually, I think the most telling point is that The Trade Desk makes more per share now than it did at the peak.
A decade of growth
The Trade Desk's software lets brands and ad agencies bid on digital ad space automatically (what the industry calls a demand-side platform), and the climb was built on its results. Revenue in 2016 was around $203 million. By 2024, it was $2.4 billion, after rising around 36% a year on average. The company made a profit in every one of those years. And spending on its platform hit $12 billion in 2024, a record.
Even the 2022 sell-off didn't break that pattern. The stock lost around half its value that year, but revenue rose about 32% year over year to $1.6 billion.
Shares went on to set their record two years later.
By then, though, investors were paying a lot for that growth. At $139.51, the stock traded at almost 230 times earnings, based on the $0.61 of earnings per share The Trade Desk had generated over the last 12 months. A price-to-earnings ratio like that arguably only made sense if fast growth kept going for many more years.
What did the crash take?
The first big drop came with a miss on the company's own forecast. The Trade Desk had guided for fourth-quarter 2024 revenue of at least $756 million, and it reported $741 million. Shares fell 33% a day later, in February 2025.
Worse, the stock shed another 39% in a single session in August 2025, the largest one-day drop since it went public. The company had just said its CFO was leaving, and it guided for third-quarter revenue growth of at least 14% year over year, a slowdown from 19% growth in the second quarter.
Growth kept slowing after that. Revenue climbed 18% year over year in the third quarter of 2025, but only 3% in the second quarter of 2026. And for the third quarter of 2026, management guided for revenue of at least $650 million, around 12% below the year-ago quarter.
The stock even lost its spot in the S&P 500(SNPINDEX:^GSPC), which it had joined in July 2025. It went to the S&P SmallCap 600 on Sept. 21.
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But profits have held up much better than the stock. Over the four quarters through June, The Trade Desk earned $0.84 a share, up from $0.61 at the peak. At $12.23, the stock trades at less than 15 times those earnings.
So most of what the stock gave back was its valuation. The price-to-earnings ratio dropped from almost 230 to below 15, even as earnings per share climbed around 38%. The newer issue is in the guidance, as a shrinking revenue line could eventually cut earnings too.
An S&P 500 fund did about as well
That $40,600 works out to an annual return of around 15% over a bit more than 10 years. But $10,000 put in the SPDR S&P 500 ETF Trust(NYSEMKT:SPY) on Sept. 21, 2016, with dividends reinvested, was worth around $41,400 as of Oct. 16 -- a nearly identical return.
The difference was the path. The S&P 500 fund never asked its owner to watch a $463,000 stake shrink to around $40,000, or to ride out two one-day drops of over 30%.
What does this say about holding a fallen growth stock? Mainly that the low entry price made the difference for a first-day holder. A buyer at $3.01 could weather a 91% fall and still quadruple their money.
A buyer at the peak, of course, would need the shares to climb around 11-fold just to break even.
And unlike in 2022, revenue probably won't grow through this slump. Until management's guidance shows growth again, I wouldn't bet on this drop working out the way the 2022 one did.
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Daniel Sparks and his clients do not have positions in any of the stocks mentioned. The Motley Fool has positions in and recommends The Trade Desk. The Motley Fool has a disclosure policy.
Source: “AOL Money”
