Since peaking at $90 in August, shares of Trading Desk (TTD) are showing signs of life again. Granted, the stock fell with slow revenue growth, increased competition, and weak guidance. Another threat is artificial intelligence (AI), with trading desks competing with Alphabet ( GOOG ) ( GOOGL ) and ( META ) owned Instagram to win ad spend.
First, OpenAI is reportedly talking about a partnership with a business desk that could help measure advertising on ChatGPT. If the deal goes through, it will make it easier for marketers to buy ChatGPT ads, as noted by eMarketer.com, “turning the platform into a true ad channel rather than an experience.” They added, “By connecting to existing advertising pipelines, ChatGPT can begin to compete for the same dollars currently going to social and search.”
Then, CEO/Founder/President Jeff Green put his money where his mouth is, buying $150 million worth of TTD stock. And while buying big eliminates risks, it tells us that someone is high with a clear vision. Certainly, AI systems are taking over human workflows in industry. However, as automated agents grow, they will still need neutral platforms that can be trusted for reliable data, which is what Greene is betting on with the trading desk.
Indeed, as noted by Greene in the present:
“Let me dig deeper into why I’m so confident the future is bright: TTD has been developing AI and machine learning tools for over a decade., Long before the last AI hype phase. AI is in our platform – our bid supercharging, our evaluation engine, our SPO efforts, our predictive cleaning product, our new deal table. Kukai is capable of analyzing 20 million ad opportunities per second, each with thousands of variables, all in terms of first- and third-party data, in milliseconds., And find the right impression for any given advertiser. That’s because we believe we have the industry’s most advanced AI and the industry’s richest, most sophisticated, target, and reliable data platform.
Analysts at Wedbush downgraded shares of Trading Desk to Underperform with a $23 share price target. They argue that investors are very excited about the potential OpenAI deal. They also note that negotiations are still in the early stages and such a deal would not generate immediate revenue for the companies. While true, Greene’s purchase of $150 million worth of stock, which is off the charts, is a high indicator. Additionally, an insider wouldn’t spend that kind of money if they thought it was a deposit. In addition, the company just approved a $500 million stock buyback program, which sends a clear message of management’s agility.
