The Trade Desk Falls Amid S&P 500 Index Removal Pressure
The Trade Desk (TTD) fell by 4% on Tuesday as index-removal flows from the S&P 500 continued to pressure its stock. Magnite (MGNI) dropped 3%, while AppLovin (APP) saw a smaller decline of less than one percent, indicating uneven sector impact. The selloff is attributed primarily to mechanical selling triggered by TTD's removal from the large-cap index and inclusion in the S&P SmallCap 600 rather than new company-specific developments. The broader market showed mixed performance with SPY remaining flat while IWM rose slightly, suggesting that the ad-tech sector’s decline was not due to overall weakness. The Trade Desk now trades at a trailing P/E of approximately 13x despite maintaining high customer retention rates above 95% for over ten years. The stock has declined by about 65% year-to-date and is currently trading below typical multiples for its sector, raising questions whether the earnings can support such valuation in future quarters.
