It wasn’t that long ago, when The Trade Desk reached an all-time high of $141.53 per share in December, 2024. Less than a year and a half later now, the stock is trading in the low-$20s, down 85%. Furthermore, that sell-off included not one, but two occasions, when it lost more than 30% of its value in a single day. For investors in The Trade Desk, high risk tolerance simply wasn’t enough. One had to be ready to suffer.
Fortunately, high valuation concerns helped us to avoid the company and it was never a part of our portfolio. But given that it trades at just ten times earnings now, while still growing revenue at a double-digit rate, valuation is no longer a problem. So we’ve decided to examine the Elliott Wave structure of the crash and see if a bottom could be near.
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The decline from $141.53 looks like a textbook A-B-C simple zigzag correction. Waves A and C are five-wave impulses, marked 1-2-3-4-5, where the five sub-waves of wave 3 of C are also visible. In between, there was another a-b-c zigzag, but to the upside in wave B. If this count is correct, wave 5 of C is likely to drag The Trade Desk stock below the $20 mark.
Once in the teens, however, the entire retracement would be complete. The preceding uptrend can be expected to resume soon. Instead of extrapolating the recent past into the future, we think that investors should take advantage of the negative sentiment around The Trade Desk stock. After all, sentiment was extremely positive in late-2024. Did that help, though?
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