5 Years from Now, You’ll Wish You’d Bought this Stock

Keith Fitz-Gerald Mar 27, 2020
5 

You’ve worked hard for your money and, if you’re like millions of investors, the coronavirus has hit your portfolio and your wallet hard.

It makes sense to protect your retirement and your money now, more than ever.

Just not like most people think.

Especially when it comes to the stock I want to share with you today.

Please pay close attention.

Digital advertising is already a $725 billion market expected to grow to another 6% in the next year.

That makes it too big to ignore and too profitable to pass over.

Not surprisingly, “everyone” wants in on the action, especially now when prices are beaten down.

But, what to buy?

Legions of investors are focused on The Walt Disney Co. (NYSE:DIS), Netflix Inc. (NasdaqGS:NFLX), Amazon.com Inc.(NasdaqGS:AMZN), and Alphabet Inc. (NasdaqGS:GOOG) when it comes to online streaming at the moment for obvious reasons – people stuck at home are streaming lots of content.

So much so, in fact, the EU’s Internal Market and Services Commissioner, a man named Thierry Breton, asked Netflix to reduce streaming quality to avoid crashing the Internet. Alphabet’s YouTube and Amazon’s Prime Streaming also followed suite.

Advertising, though, is another matter.

I think there’s going to be a huge uptick in spending.

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The audience of people companies can reach and advertisers can irritate is bigger than ever, especially with millions trapped in their home in COVID-19 impacted areas.

Which brings me to The Trade Desk (Nasdaq:TTD).

Shares have dropped more than 40% since February 19th as I type but I think the move is grossly overdone. The shift to mobile devices and a confined audience is simply too good to pass up.

Advertisers are going to glom on to the company’s software because it allows them and their agencies to buy digital advertising quickly and cost-effectively, using data to zero in on effectiveness, reach, and frequency. Rather than having to waste gobs of time negotiating in person to get “sorta” in the neighborhood.

Keep in mind, again, we’re talking about a $725 billion market that will very shortly top $1 trillion or more. Agencies can already pick from more than 500 billion digital advertising opportunities a day.

To put that in perspective, we’re talking roughly 69 billion advertising opportunities for every person alive on the planet today… every day. I can’t imagine we consume that much content but, evidently, we do!

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Anyway, that’s particularly important because larger brands – meaning companies like Roku, LinkedIn, ESPN – have really only just begun to exploit the advantage. Trade Desk data suggests that the so-called large programmatic media spending may be quadrupling every three years.

Not surprisingly, revenues jumped from just $45 million in 2014 to $661 million in 2019 and may hit $863 million in 2020, even with the coronavirus situation expected to cut into corporate budgets worldwide. That’s roughly 10 times the growth rate of overall advertising industry spending.

The other thing to think about is that The Trade Desk uses artificial intelligence to match advertisers with their choice – and very specific – target markets. Advertising customers no longer have to carpet bomb specific demographics to ensure visibility in the old days when “rabbit ears” were a fixture in living rooms around the world. Now they can carefully target their audiences at a time when programmatic advertising has been growing 20% to 30% a year.

I’m hearing grumblings from companies that the “spend” is down because of the coronavirus situation, but I don’t think that’s accurate on anything other than a very short-term basis.

I see the recovery on the other side as a function of still more spending at a time when audiences are extremely receptive to the “what comes next” narrative this involves.

Marketing will get more aggressive, not less as media consumption increases.

Virus or no virus.

I can hardly wait!

Until next time,

Keith

5 Responses to 5 Years from Now, You’ll Wish You’d Bought this Stock

  1. polywan says:

    Believe that i never lived in prison alone there so many nations in prison. the truth is making sin, get sin

  2. Charles DiDonato says:

    Thanks Keith! I have been watching TTD very closely, looking for an entry point to begin building a position. I would logically expect advertising to drop though as companies reduce expenses to conserve cash, just in case this pandemic lasts longer than expected. Also, why advertise when people aren’t going to buy right now? I’m not spending on anything other than essentials, are you?

    Be safe!

    • Keith says:

      Hi Charles.

      Great plan you have for sure. I often watch stocks I fancy for quite some time to ensure I understand how they behave. I think your thesis is sound but, respectfully, would push back on “must-have” advertising versus “nice to have” advertising. Most of the “must-have” CEOs are ramping up for the other side already and I think that’s going to carry into advertising.

      As for essentials, our family, too. Stay safe and healthy!

      Best regards and thanks for being part of the Total Wealth Family, Keith 🙂

  3. Soledad says:

    On 3/19/20 The Trade Desk Launches Advertising Collaboration with Tik Tok across Asia-Pacific , but as of yesterday heard a news on that Tik Tok holds major national security risk, collects information about the device you use…etc and send to Communist Leaders in China. The Pentagon , The Department of State, The Department of Home Land Security, The TSA have all banned their employee and service members from using
    Tik Tok on government devices. Legislation soon will pass a law to ban tik tok use for Federal Employees on Federal Devices….correct me if wrong

    • Keith says:

      Hi Soledad.

      All indications are that’s the case. However, I think the situation will wind up being much like Zoom in that they’ll move on. That’s a benefit longer-term … I think!

      Best regards and thanks for being part of the Total Wealth Family, Keith

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