Analyst Slams Trade Desk Stock Ahead of Earnings

TTD stock is pacing for its worst session in months

Deputy Editor
Feb 20, 2019 at 2:43 PM
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The shares of Trade Desk Inc (NASDAQ:TTD) are sinking today, after Stifel cut its rating on the tech concern to "hold" from "buy." The downgrade comes just before the company's fourth-quarter earnings report, which is slated for release after the market closes this Thursday, Feb. 21. The analyst said that while he expects strong earnings and revenue from Trade Desk, expectations are presently too "elevated." As a result, TTD stock is down 9.4% at $146.42, at last check -- pacing for its biggest one day drop since November. 

Trade Desk stock has added roughly 45% since its late December lows, which were contained in the $100-$105 area -- a level of support for TTD since its August bull gap. The stock just touched an all-time high of $165.70 yesterday, and today's pullback has so far been contained by TTD's 20-day moving average.

Plenty of short sellers will be cheering today. Though TTD's spiral has landed it on the short-sale restricted list, the 3.9 million shares sold short represent 11.4% of the stock's available float, or over a week of trading, at the equity's average daily volume.

Ahead of tomorrow's earnings, puts are trading at six times the normal intraday volume, with just over 7,300 contracts changing hands. That just outnumbers the 6,700 TTD call contracts exchanged -- three times the average intraday pace. Most of the action is transpiring at the March 110 put and weekly 2/22 145-strike put. Buyers of these puts expect Trade Desk shares to extend their retreat through the respective strikes within the options' lifetime.

Drilling down, TTD options are pricing in a 20.6% swing for tomorrow's session, which comes in slightly lower than the security's average single-day post-earnings move of 22.5% during the last seven quarters. The stock has moved higher after the company's last four earnings reports, including a 23.8% one-day gap last February.


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