TTD
The Trade Desk, Inc.
$17.29
High-Growth Software
80%
Revenue × Terminal Margin DCF
Strong
·
Conviction
Undervalued
Trading 46.3% below fair value
You pay
$17.29
Bear
$19.31
Fair
$32.17
Bull
$45.58
Bear
$19.31
+11.7%
10% rev growth, 19% terminal margin
Fair
$32.17
+86.1%
16% rev growth, 25% terminal margin
Bull
$45.58
+163.6%
21% rev growth, 29% terminal margin
Key Value Driver
Revenue growth (16%) × margin expansion to 25%
Terminal Value % of EV
52%
Implied Market Multiple
2.5x
Summary
Our base-case estimate uses a discounted cash flow model based on revenue growth and long-run free cash flow margins. We then blend that result with the average analyst price target of $26.98 from 47 analysts, using a 30% weight on analyst consensus. That produces an estimated intrinsic value of $32.17 per share.
Warnings
Gross margin of 79% means each dollar of revenue is highly profitable. As the company grows, overhead costs should shrink as a share of revenue, boosting overall profits.
Wall Street's average price target is $26.98 (from 47 analysts). Our estimate is 28% above the consensus -- consider that gap carefully.
Key Risks
- Current FCF misleads — the model values future margins, not today's cash
- SBC dilution is the hidden tax: 2-4% annual share growth compounds fast
- Revenue deceleration is inevitable — the question is when and how steep