TTD had a solid quarter - the company continues to exhibit excellent financial fundamentals, high growth, high margins, and a strong balance sheet.
The CEO's personal wealth gain potential is highly leveraged to the TTD stock price, providing an unusually high degree of alignment between executive and shareholder interests.
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Financial fundamentals at TTD are excellent
TTD is a high growth, high margin business with a very robust balance sheet. Ultimately the drivers of revenue are twofold (1) advertiser confidence, which is usually a function of GDP growth, and (2) degree of online ad spend vs. offline. Finally the degree to which entropy applies online - which is to say the degree to which user screen time grows and flourishes outside the walled garden sites - is relevant. The more concentrated the users within walled gardens, the less valuable is TTD. The more users are distributed across multiple sites and environments, the more valuable is TTD.
Over and above the fundamentals there is a single reason why I personally hold a long-term position in this name, and that is the huge stock compensation plan that was awarded to Green by the board of directors in 2020/21. In short, Green's personal wealth - already considerable - is highly leveraged to the TTD stock price in a similar way to Musk/Tesla in 2018/19 and onwards.
I believe Green to be an excellent CEO, and I also believe him to be highly motivated by the actual and/or optical benefits of wealth. So I believe this comp plan will continue to motivate his efforts to grow the company to the benefit of the stock price. This is a genuine kind of alignment between executive and shareholder of the type not found in just any company.
Finally, the company's moat is such that whilst adtech vendors come and go at the low end, there are few with the scale to challenge TTD; I believe this scale advantage will persist.
Let's take a look at the numbers, valuation and stock chart.
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