1 Growth Stock Down 60% to Buy Hand Over Fist in the Nasdaq Correction

Despite the challenges facing the stock, there is still much to value about The Trade Desk.

This year has seen the Nasdaq Composite experience significant highs and lows, starting with a remarkable performance in 2023 and 2024, where it recorded an increase of 84.5%. However, on March 13, the index plummeted to 17,303.01, marking a 14.2% decline from its previous peak of 20,173.89 on December 16. This dip officially categorized the index as in correction territory, having exceeded a 10% drop. While there was a slight rebound in the last few weeks, the Nasdaq remains approximately 10% below its earlier high.

Future movements of the Nasdaq are uncertain as economic conditions evolve. Historically, market corrections often precede strong recoveries. Data from Clearnomics and Standard & Poors, as analyzed by Covenant Wealth Advisors, suggests that, on average, markets experience a downward trend for five months and then recover within about four months. While past trends are not guaranteed predictors of future outcomes, they can provide insights into investing strategies.

Given this backdrop, now might be an opportune moment to consider investing in high-quality firms that are financially robust, possess competitive advantages, and are available at appealing valuations. One such company is The Trade Desk (TTD), which has seen its share price decline nearly 52% this year. Moreover, it is down 60.2% from its all-time high reached in December.

The significant pullback can be viewed as a potential buying opportunity for long-term investors willing to endure some temporary market fluctuations.

Temporary Setback

The Trade Desk faced a disappointing fourth quarter, as its revenues fell short of analysts' expectations as well as the company's own guidance. The CEO, Jeff Green, noted that this revenue shortfall was the result of execution errors during a reorganization process in December. This included redefining roles, structural changes in reporting, and a renewed focus on internal effectiveness and scale.

Once these execution issues are resolved, the prospects for returning to a growth path look promising.

Multiple Tailwinds

The Trade Desk operates as an independent demand-side platform (DSP), assisting advertisers in placing their advertisements effectively across various content platforms. In 2024, nearly $12 billion in ad spending was channeled through its platform, representing just over 1% of the $1 trillion global advertising industry. This indicates considerable growth potential within this sector.

The company's fastest-growing segment is connected television, which made up a significant portion of its revenue. As more viewers shift from traditional linear television to streaming services, the contribution of connected TV advertising to The Trade Desk's revenue is expected to rise swiftly in the near term.

Unlike major competitors like Alphabet and Amazon, which have their own advertising inventory and create