Down 75% in the Past Year, Has The Trade Desk Stock Become a Bargain Buy?

Shares of The Trade Desk (NASDAQ: TTD) have been in a downward spiral for over a year, as concerns about slowing demand and artificial intelligence (AI) disrupting its operations have sent investors for the exits. In just the past 12 months, the stock has crashed an incredible 75%.

Is the stock headed for even more of a decline, or could now be a good time to buy it while its value is so low?

A poor Q2 performance sends the stock to new lows

Last week, Trade Desk reported its second-quarter results for the period ending June 30. Not only did the adtech company generate just a modest 3% growth, but its numbers came in significantly below expectations. Revenue of $715 million was nowhere near the $752.6 million analysts expected, highlighting the growing challenges it's facing in the market.

Trade Desk's growth may be underwhelming, but the business itself remains profitable. Operating income totaled $101.6 million last quarter, which was a 13% decrease from the prior-year period. It's disappointing, but not awful.

However, there's greater competition in the space due to AI, and AI-powered search also creates new challenges: internet users now rely more heavily on chatbots for answers rather than visiting websites, which may impact The Trade Desk's long-term growth prospects.

It wasn't all bad news for the company this past quarter, as The Trade Desk highlighted an important metric in Q2: 95% customer retention. That's a good sign that its customers continue to see value from the company's offerings, but they may not be ramping up their spending. That may be due to AI, but also broader economic uncertainty and challenges.

There was, unfortunately, much more bad than good this past quarter, resulting in shares of Trade Desk hitting new 52-week lows recently.

Is Trade Desk stock worth taking a chance on right now?

The Trade Desk stock has taken such a beating over the past year that it now trades at a lowly 12 times expected future earnings (based on analyst expectations). While that is light, it's hard to make the case for buying the troubled stock amid so much uncertainty ahead. Without a catalyst or reason to suggest that it can turn things around, the stock may end up only going lower in the weeks and months ahead.

Taking a wait-and-see approach with Trade Desk may be most appropriate right now, as it's looking more like a value trap than a good buy, given all the uncertainty around its operations these days.

David Jagielski, CPA has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends The Trade Desk. The Motley Fool has a disclosure policy.