The Trade Desk's 68% Crash: How Wall Street's AI Darling Became the S&P 500's Biggest Loser

One year ago, The Trade Desk was riding high. The demand-side advertising platform had delivered 33 consecutive quarters of meeting or beating Wall Street expectations—an eight-year streak of perfection that earned the company a premium valuation and devoted following among growth investors.

Then came February 2025, and everything changed.

A single earnings miss—the company's first in its history as a public company—triggered a cascading collapse that has wiped out 68% of The Trade Desk's market value, dropping its capitalization from $70 billion to roughly $19 billion. The stock is now the worst performer in the entire S&P 500 for 2025, and has been removed from the Nasdaq-100 index effective December 22.

The Earnings Miss That Started It All

The Trade Desk's fourth-quarter 2024 results, released in February, missed revenue estimates for the first time since the company went public in 2016. The shortfall was modest—roughly 2% below consensus—but the psychological impact was devastating.

For a company that had built its valuation on flawless execution, any imperfection raised existential questions. Investors who had paid premium multiples for growth and consistency suddenly questioned whether the story had changed.

The stock dropped 30% on earnings day. It never recovered.

"When you're trading at 50 times sales, you can't miss. Ever. The Trade Desk missed once, and the market repriced eight years of perfection in a single day."

— Brent Thill, Technology Analyst at Jefferies

Structural Headwinds Emerge

The earnings miss exposed deeper challenges that bulls had previously dismissed:

Political ad spending comparison: 2024 was an election year, driving elevated advertising spending that The Trade Desk benefited from. 2025's non-election comparison made year-over-year growth particularly challenging.

Growth deceleration: Revenue growth decelerated from the mid-20% range to approximately 18% in 2025—still respectable, but a marked slowdown that justified a lower valuation multiple.

Competitive pressures: Amazon has aggressively expanded its advertising business, including securing exclusive connected TV (CTV) inventory deals with Netflix, Disney, and Roku. CTV is The Trade Desk's most important growth category, making Amazon's expansion particularly threatening.

The AI Wild Card

Perhaps most concerning for long-term investors is the potential for artificial intelligence to disrupt The Trade Desk's core business model. As AI tools become more sophisticated, they may enable large brands and agencies to buy programmatic advertising directly from platforms like Disney, Netflix, or Google—without needing an intermediary like The Trade Desk.

"If you believe Trade Desk could go obsolete over the next five years because of AI, you should not pay a premium for its stock today," wrote one analyst at Cowen. The market seems to agree.

The Bull Case: Still Standing

Not everyone has given up on The Trade Desk. The company remains profitable, continues to grow revenue (albeit at a slower pace), and holds a leadership position in the independent demand-side platform market.

Key arguments for the bulls:

• CTV opportunity: Despite Amazon's encroachment, the connected TV advertising market is enormous and still growing rapidly
• Retail media: Partnerships with Walmart, Albertsons, and other retailers provide exposure to the fast-growing retail media segment
• Valuation reset: At roughly $19 billion, expectations have been significantly reset. Future beats could drive outsized returns
• Recurring revenue: Customer retention remains high, providing a stable revenue base

Analysts' consensus rating remains "Moderate Buy" with a mean price target of approximately $62—implying potential upside of more than 65% from current levels.

Management's Response

CEO Jeff Green has acknowledged the challenges while maintaining confidence in the company's long-term trajectory. In recent communications, he emphasized:

• Continued investment in artificial intelligence capabilities within the platform
• Expansion of international operations, particularly in emerging markets
• Deeper integration with streaming platforms and retail media networks
• Focus on customer acquisition and retention in the mid-market segment

Whether these initiatives can reignite growth remains to be seen.

Lessons for Investors

The Trade Desk's 2025 collapse offers several important lessons:

Valuation matters: Even great companies can be terrible investments at the wrong price. The Trade Desk's problems weren't catastrophic—growth slowed from excellent to merely good—but a 50x sales multiple left no margin for error.

Perfection has a price: Companies with unblemished track records often receive premium valuations. But those premiums can evaporate instantly when perfection proves temporary.

Competition evolves: Amazon's aggressive expansion into advertising caught many investors off guard. Dominant positions in technology are never permanent.

What Comes Next

For investors considering The Trade Desk at current prices, the calculus is straightforward: do you believe the company can stabilize growth, fend off Amazon, and navigate AI disruption? If yes, the stock may offer compelling value after a 68% haircut. If no, further downside remains possible.

One thing is certain: The Trade Desk will enter 2026 with something to prove. After a humbling 2025, the pressure is on management to demonstrate that the company's best days are not behind it.