Trade Desk Price Target Cut in Downgrade; TTD Down as NFLX and AMZN Strike Deal

The Trade Desk's stock price (NASDAQ:TTD) is taking a bit of a beating today, down 9.33% as a confluence of negative factors weighed on market sentiment. A prominent analyst downgrade coupled with a strategic partnership announcement between Amazon and Netflix heightened concerns about the competitive landscape for the advertising technology company, with today's decline extending the YTD drop to 59.67%.

A revised outlook from Morgan Stanley, which lowered its rating on The Trade Desk from “Overweight” to “Equal Weight.” and slashed their price target, from $80 to $50, has not helped bulls.

Morgan Stanley's rationale centered on potential headwinds facing The Trade Desk's core connected TV (CTV) business in 2025. The firm cited execution concerns, softness in the open web ad market, and increasing competition within the connected TV space as key drivers behind the downgrade. This revised assessment suggests a belief that The Trade Desk may face challenges in maintaining its growth trajectory amidst a rapidly evolving digital advertising environment.

Adding to the negative sentiment, Amazon Ads (AMZN) and Netflix (NFLX) unveiled a strategic partnership aimed at providing advertisers with direct access to Netflix's premium ad inventory through Amazon's Demand-Side Platform (DSP).

This collaboration, slated to launch in Q4 2025, spans multiple key markets, including the United States, United Kingdom, France, Spain, Mexico, Canada, Japan, Brazil, Italy, Germany, and Australia. The partnership represents a significant development in the competitive dynamics of the digital advertising sector, potentially creating new avenues for brands to reach a vast audience through the combined reach of Amazon and Netflix.

The Amazon-Netflix partnership could intensify competition for advertising dollars, particularly within the connected TV space. By offering advertisers seamless access to Netflix's premium inventory through Amazon's DSP, the collaboration presents a compelling alternative for brands seeking to engage with a large and engaged audience. This move could potentially divert advertising spend away from other platforms, including The Trade Desk, as advertisers explore new opportunities to maximize their reach and effectiveness.

The market's reaction to these developments underscores the sensitivity surrounding The Trade Desk's future growth prospects. While the company has established itself as a leading player in the programmatic advertising space, the evolving competitive landscape and potential challenges in the CTV market have raised concerns in the market. Having fallen more than 40% since the turn of the year, a tough year get's a little harder today.