Amid the devastation of the novel coronavirus on the markets, one of the names you’d expect to have done well is Trade Desk (NASDAQ:TTD). Specializing in programmatic advertising geared specifically toward maximizing the non-linear TV platform – basically cord cutting in laymen’s terms – TTD stock should have jumped higher on the “hostage” audience thesis.
Of course, the best example of this is Netflix (NASDAQ:NFLX). While NFLX shares stumbled upon the immediate breaking of the crisis, they experienced a remarkable rebound. Honestly, anybody that could identify basic patterns could see this coming. As CNN reported, a mix of compelling shows and the forced quarantine of millions of Americans with nothing to do created an extremely robust catalyst.
In turn, you would expect TTD stock to share in the spoils. Although Trade Desk isn’t a content creator, it’s one of the emerging companies that have pounced on the revolution of programmatic advertising. Unlike traditional linear TV, streaming platforms naturally feature a data goldmine due to innovations such as on-demand content; that is, content that specific viewers want to watch, when they want to watch them.
Thus, Trade Desk can offer advertisers highly targeted advertisements that wasn’t possible in the exclusively linear era. So, why is TTD stock down on a year-to-date basis, despite Wednesday’s monstrous 13% gain?
As with streaming giants like Netflix and Disney (NYSE:DIS), the dramatic shock of the coronavirus is something investors must respect. But another point is that linear TV, while limited, does have its advantages.
For one thing, the traditional platform gives viewers access to highly relevant local news, which is obviously important right now. But over time, the benefits of streaming will overwhelmingly dominate the debate.
TTD Stock to “Exploit” Linear TV’s Major Weakness
While streaming has convinced many consumers – particularly millennials and Generation Z – to cut the cord, many consumers remain tethered. Naturally, these folks tend to be on the older end of the demographic spectrum. As such, they’re not used to the learning curve that streaming requires.
And let’s not kid ourselves – there is a learning curve, especially if you’ve subscribed to traditional TV all your life. For these folks, the biggest hurdle is the lack of intuitive sports programming.
Of course, streaming services offer live sports shows, but they come at a steep cost. By the time you find the package that works for you, you could end up paying a costly monthly fee. Therefore, many sports fanatics are incentivized to stay with their traditional subscriptions.
But for TTD stock, the coronavirus has a blazing, though incredibly cynical silver lining. Covid-19 didn’t just shut down our economy, but it took down an integral component of our daily existence: sports.
First, the low-hanging fruit is that without any organized sports leagues playing in the U.S. – and it doesn’t help that the Summer Olympics are postponed – zero demand exists for sports content. And with that, a huge selling point of linear TV just went down the toilet.
Second and more importantly, linear consumers are wising up to the situation, spurred by economic necessity. Earlier this month, the New York Times featured a family looking to cut their expenses. Naturally, non-essential expenditures like a massive cable bill was among the first targeted areas. Quickly, they discovered that they were paying for a “sports fee” that is clearly out of commission.
For many consumers, the easy solution is cutting the cord. Without sports, linear TV lost its last vestige of relevancy.
Trade Desk Has All the Cards
You know what the beautiful part is, though? Once we get back to normal, whether that’s in a few months or next year, the streaming industry will be much better prepared for ironing out its weaknesses.
Ultimately, with a name like TTD stock, you want to think longer term. With digital, non-linear platforms, they always have the opportunity to improve. On the other hand, linear TV will likely be stuck in its ways. That’s why it’s called linear – you’re simply watching content from point A to point B. With streaming, the viewership experience is essentially three dimensional.
Thus, don’t expect non-linear platforms to merely let sports viewership be the one arena where they can’t compete. With sports transitioning toward this new innovation in content viewership, Trade Desk has an organic marketing opportunity. Again, due to the targeted capacity of programmatic advertising, Trade Desk is light years ahead of archaic advertising solutions.
Finally, as the Times pointed out, many consumers are sick and tired of getting fleeced by the big, bad linear players. In response, we’ll see a transition to streaming. And in this near-future ecosystem, Trade Desk is holding all the cards.
Matthew McCall left Wall Street to actually help investors — by getting them into the world’s biggest, most revolutionary trends BEFORE anyone else. The power of being “first” gave Matt’s readers the chance to bank +2,438% in Stamps.com (STMP), +1,523% in Ulta Beauty (ULTA) and +1,044% in Tesla (TSLA), just to name a few. Click here to see what Matt has up his sleeve now. Matt does not directly own the aforementioned securities.
