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| The Trade Desk CEO, Jeff Green, whose company is battling Amazon. Greg Doherty/Variety via Getty Images |
The Trade Desk’s stock suffered its worst day on record Friday, plunging nearly 40% despite reporting earnings that beat expectations. Analysts say the sharp drop reflects growing concern that Amazon’s rapid rise in the advertising sector especially in connected TV (CTV) is threatening The Trade Desk’s future growth.
While The Trade Desk’s leadership insists the company plays a distinct role as a neutral ad technology provider, Wall Street is increasingly skeptical. The main fear: Amazon’s expanding ad business, fueled by strategic partnerships and a growing portfolio of live sports, could erode The Trade Desk’s market share in the years ahead.
CFO Exit Overshadowed by the “Amazon Effect”
The adtech firm also announced the departure of its chief financial officer, but analysts largely downplayed that factor compared to the competitive threat from Amazon. The Trade Desk CEO Jeff Green pushed back against the idea that his company is in direct competition with Amazon or Google, arguing that The Trade Desk focuses on buying ad space across the open internet without owning any media properties.
“Amazon is not a competitor, and Google really isn’t much of a competitor anymore either,” Green said on the company’s earnings call. “We’re trying to buy the open internet, leveraging technology that values media objectively. We don’t grade our own homework.”
However, analysts aren’t entirely convinced. Firms like LightShed Partners and MoffettNathanson issued stark warnings, with LightShed saying Green was “either in a serious state of denial or living in an alternate reality.” MoffettNathanson cut its rating on The Trade Desk to “sell,” calling the competitive threat from Amazon “front and center … and harder to deny.”
Others took a more optimistic view. Evercore maintained its “outperform” rating, pointing to The Trade Desk’s growing partnerships with Netflix, Roku, and Spotify, as well as its expansion into retail media and global markets.
Amazon’s Rapid Rise in Connected TV Ads
Amazon’s momentum in the ad market has been building since it made ads the default on Prime Video last year. This move gave the company instant scale in the CTV space, drawing in advertisers eager to tap into Amazon’s vast customer data and purchasing behavior insights.
In addition to its core retail targeting capabilities, Amazon has been expanding its live sports portfolio most recently adding NBA games to its Prime Video lineup and striking deals to sell ads on Roku devices. These moves position Amazon to challenge established players like Disney’s Hulu and Comcast’s NBCUniversal.
Industry insiders told Local press that Amazon’s entry into the CTV space has made it increasingly difficult for all but the largest media companies to compete. A Morgan Stanley report from mid-2024 predicted that Amazon could overtake YouTube as the dominant force in U.S. smart TV advertising by 2027.
Amazon’s second-quarter 2024 earnings supported this bullish view, showing its overall ad business up 22% year-over-year to $15.7 billion, surpassing analyst forecasts. The company has also partnered with services like HBO Max and Apple TV+ to make Prime Video a central hub for streaming content.
A Shrinking Pie in a Crowded Market
The biggest concern for rivals is that CTV advertising may no longer be the explosive growth engine it once was. If overall growth slows, Amazon’s expanding share could mean other players are forced to compete for smaller slices of revenue.
Michael Nathanson of MoffettNathanson noted that the U.S. CTV ad market has shown signs of broader deceleration in recent quarters. “There’s an intensifying competition from Amazon and Google,” he said, warning that The Trade Desk’s bullish supporters may be underestimating these headwinds.
For now, The Trade Desk continues to bet on its position as an independent, technology-driven platform serving the open internet. But with Amazon’s aggressive push into connected TV and the possibility of a slowing market, 2025 could be a decisive year in determining whether The Trade Desk can maintain its growth trajectory or whether Amazon’s ad dominance will reshape the landscape entirely.
