If you open up Yahoo Finance and look up the historical price of The Trade Desk (NASDAQ:TTD) stock, you’ll see that it’s price is down 90%. But that’s not entirely accurate. TTD stock recently underwent a 10-for-1 split of its stock, wherein each current share of TTD stock turned into 10 new shares of the stock at 10% the value each.
The actual underlying value of the company remains unchanged. As of this writing, shares are actually up on the day.
So why did TTD stock split?
TTD Stock Split: Why Trade Desk Hit ‘Reset’ On Its Stock Price
Well, it’s not unusual to see companies split their stock, which sometimes occurs so as to increase the access of retail investors.
When a stock sees the sort of hot streak that TTD stock has experienced, it can go from $50 to $500 in as little as three months. Obviously, $500 is a steep price point for a single share, so a company with a red-hot stock price can split its shares to drive the stock price back down to $50 without devaluing the stock for current shareholders.
This is almost always a good thing.
Consider that companies tend to like big stock prices. Its a status thing, a sign of managerial success. So when a company splits its stock, it’s usually because the management team believes the company has enough fundamental catalysts on the horizon to quickly push the post-split stock higher.
This is what happened with Trade Desk’s stock.
For one, you have the world’s leading data-drive advertising technology company here. As the digital ad world pivots toward programmatic advertising, Trade Desk is absolutely on fire. Its revenues have grown by 30%-plus in 12 of the past 13 quarters, and its EBITDA margins have remained healthy.
TTD stock has been hit recently, however, on concerns related to the phasing out of third-party cookies on web browsers. The Trade Desk relies heavily on cookies to track and identify customers, and to run its data-driven ad campaigns.
But the company has come up with a solution — Unified ID 2.0.
This is basically the next evolution of cookies. It works the same way as cookies — it enables consumer tracking — but it does so anonymously. It protects the identities of consumers. Unified ID 2.0 represents the future. It will be a superior solution to cookies.
As cookies become obsolete over the next 12 months, and investors see that Unified ID 2.0 works, the stock will rebound to all-time highs.
That’s $1000 pre-split, and $100 post-split.
Bottom line: Buy TTD stock on the split and don’t look back.
The Trade Desk is one of my top picks in the digital advertising industry, and will score investors big returns over the long-term. That said, it’s not the only high-growth, high-return stock on my radar today.
In fact, I have compiled a list of 9 stocks (including Trade Desk) in what I call the Digitainment megatrend, many of which could score investors Amazon-like returns over the next few months and years, such as a world-class Digitainment stock creating the building blocks of the metaverse.
On the date of publication, Luke Lango did not have (either directly or indirectly) any positions in the securities mentioned in this article.
By uncovering early investments in hypergrowth industries, Luke Lango puts you on the ground-floor of world-changing megatrends. It’s the theme of his premiere technology-focused service, Innovation Investor. To see Luke’s entire lineup of innovative cutting-edge stocks, become a subscriber of Innovation Investor today.