The Trade Desk (TTD) Slid on an Earnings Miss

Baron Funds, an investment management company, released its “Baron Small Cap Fund” first-quarter 2025 investor letter. A copy of the letter can be downloaded here. In the first quarter of 2025, the fund was down 9.07% (Institutional Shares) compared to the Russell 2000 Growth Index’s (the Index) -11.12% return. Small-cap stocks continued to underperform larger market caps meaningfully, so the Fund lagged the Russell 3000 Index, which fell 4.72% in the quarter. In addition, please check the fund’s top five holdings to know its best picks in 2025.

In its first-quarter 2025 investor letter, Baron Small Cap Fund highlighted stocks such as The Trade Desk, Inc. (NASDAQ:TTD). Headquartered in Ventura, California, The Trade Desk, Inc. (NASDAQ:TTD) is a technology company that offers a self-service cloud-based ad-buying platform. The one-month return of The Trade Desk, Inc. (NASDAQ:TTD) was 35.83%, and its shares lost 22.02% of their value over the last 52 weeks. On May 23, 2025, The Trade Desk, Inc. (NASDAQ:TTD) stock closed at $73.89 per share with a market capitalization of $36.312 billion.

Baron Small Cap Fund stated the following regarding The Trade Desk, Inc. (NASDAQ:TTD) in its Q1 2025 investor letter:

“The Trade Desk, Inc. (NASDAQ:TTD) is the leading internet advertising demand-side platform, enabling agencies to efficiently purchase digital advertising across PC, mobile, and online video channels. Shares fell on an earnings miss for the first time in 33 quarters. We believe the miss was due largely to a company reorganization in December and delays in its Kokai platform rollout, both of which we believe have since improved. We believe Trade Desk still represents the best option for biddable Connected TV (CTV) inventory. We note Trade Desk gained share against the incumbent Google in the last five years, even when Google charged low/no fees, and major companies like Netflix, Disney, and Spotify have opened their ad inventory to Trade Desk. Its market remains large and underpenetrated, as the shift to CTV advertising is still in the early stages. We believe Trade Desk can grow its top line by high teens to 20% year-over-year for years to come.”

The Trade Desk, Inc. (NASDAQ:TTD) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 61 hedge fund portfolios held The Trade Desk, Inc. (NASDAQ:TTD) at the end of the first quarter compared to 63 in the third quarter. The Trade Desk, Inc. (NASDAQ:TTD) reported revenue of $616 million in Q1 2025, representing an increase of 25% from Q1 2024. While we acknowledge the potential of The Trade Desk, Inc. (NASDAQ:TTD) as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is as promising as NVIDIA but that trades at less than 5 times its earnings, check out our report about the undervalued AI stock set for massive gains.

In another article, we covered The Trade Desk, Inc. (NASDAQ:TTD) and shared the list of stocks Jim Cramer recently commented on. In Q1 2025, Baron Fund’s Technology Fund added its position in The Trade Desk, Inc. (NASDAQ:TTD), believing in its solid long-term growth potential. In addition, please check out our hedge fund investor letters Q1 2025 page for more investor letters from hedge funds and other leading investors.

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Disclosure: None. This article is originally published at Insider Monkey.