The Trade Desk Stock Has a Lot to Prove on Thursday

One of the biggest stars of the IPO class of 2016 will be front and center this week when The Trade Desk (NASDAQ: TTD) delivers fresh financials. The programmatic advertising specialist will be reporting its third-quarter results shortly after Thursday's market close.

The Trade Desk's earlier guidance calls for $76 million in revenue for the quarter, 43% ahead of where it landed a year earlier. It sees adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) of $21 million, 27% higher than the $16.6 million it rang up in last year's third quarter. The Trade Desk doesn't offer up a net income target, but analysts see an adjusted profit of $0.27 a share. It delivered adjusted earnings of $0.24 a share a year earlier.

Beat and raise

The Trade Desk stock has more than tripled since going public at $18 just 14 months ago. The stock is trading 136% higher in 2017. A big key to its success is its ability to consistently crank out monster quarters as ad buyers flock to its data-driven platform to purchase advertising across various outlets.

It's been a perfect "4-for-4" in its first four quarters as a public company, blowing through its own and analyst expectations. It has landed at least 14% ahead of Wall Street estimates, giving investors a good reason to expect more than the $0.27-a-share profit that analysts are modeling. The Trade Desk has also been a serial lowballer with its own sneak peeks. Three months ago, it came through with adjusted EBITDA of $25.3 million and $72.8 million in revenue for the second quarter, well ahead of the $14.5 million in adjusted EBITDA and $67 million in revenue that it was forecasting three months earlier.

The end result of blowout performances is that the stock has moved higher the day after reporting financial results in all but one quarter.

  • Q3 2016 -- up 8.6%
  • Q4 2016 -- down 2.8%
  • Q1 2017 -- up 30.1%
  • Q2 2017 -- up 8.8%

The slight decline following last year's fourth quarter shows that even a "beat and raise" showing isn't always enough to lift the shares higher, but the stock did climb 11.6% for that entire week as the shares had run up ahead of the report. Either way, it's hard for bears to fight against an 11.2% average gain the day after reporting earnings.

An important caveat here is that the stock has had a big run since its last quarterly beat. The Trade Desk stock has risen more than 30% since posting its second-quarter results. A strong quarter could still smoke out valuation concerns, but the trend so far is clearly in favor of the bulls.

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Rick Munarriz has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends The Trade Desk. The Motley Fool has a disclosure policy.