The political climate in the United States is bracing for significant changes as the country approaches its upcoming presidential election. Recent events have added to the already charged atmosphere: a gunman attempted to assassinate former President Donald Trump, and current President Joe Biden has announced his decision to withdraw from the race, endorsing Vice President Kamala Harris as his successor. These dramatic shifts are not only reshaping the political landscape but are also poised to impact financial markets and the media industry in substantial ways.
Market Reactions and Rising Advertising Expenditures
In the wake of these developments, market analysts are bracing for increased uncertainty and volatility. Chris Versace, an analyst at TheStreet Pro, pointed out that Biden’s exit from the presidential race is likely to intensify market fluctuations. He noted that although the ultimate outcome of the election remains unpredictable, the political dynamics are expected to lead to a highly contentious race. This heightened volatility will influence various sectors, particularly the advertising market, which is gearing up for a surge in spending.
Political campaigns are anticipated to drive unprecedented levels of investment in media and advertising. Market research firm eMarketer projects that U.S. political ad spending will exceed $12 billion in 2024, marking a dramatic increase from the $4.25 billion spent during the 2016 election cycle. This surge is indicative of the growing importance of digital advertising formats, including connected TV (CTV), which refers to televisions connected to the Internet.
The Trade Desk and the Evolution of Programmatic Advertising
The Trade Desk, a prominent programmatic marketing company, is well-positioned to benefit from the anticipated rise in political ad spending. The company specializes in the automated buying and selling of media inventory across various channels, including display, video, audio, and CTV. As political campaigns ramp up their ad spending, The Trade Desk is expected to play a crucial role in facilitating these transactions.
Jeff Green, the founder and co-CEO of The Trade Desk, has discussed the profound impact of the COVID-19 pandemic on the media landscape. He highlighted that the pandemic accelerated the shift from traditional cable TV to streaming services and CTV. This transformation has fundamentally altered how advertisers plan and execute their campaigns, positioning The Trade Desk to capitalize on these changes. The company’s solutions are designed to address the evolving needs of advertisers in this new media environment.
Analysts’ Perspectives and Adjustments
Given the shifting dynamics and the expected surge in political ad spending, analysts have been revising their price targets for The Trade Desk.
Wedbush Analyst Scott Devitt: Devitt has maintained an outperform rating for The Trade Desk, setting a price target of $110. He cited positive feedback from advertisers and strong demand trends, especially in the CTV sector, as key factors supporting his optimistic outlook. Devitt also noted that the company’s second-quarter guidance appeared conservative, suggesting potential for upside performance.
Morgan Stanley Analyst Matthew Cost: Cost has raised his price target for The Trade Desk to $110 from $100, reflecting a positive view of the company’s prospects. His analysis highlights expectations for growth driven by political and event-related spending, although he remains cautious due to some early-quarter performance lag.
BTIG Analyst Clark Lampen: Lampen increased his price target on The Trade Desk to $110 from $98, maintaining a buy rating on the shares. He noted constructive feedback from recent checks and anticipated improvements in digital advertising trends, bolstered by political and Olympics-related spending. Despite this optimism, Lampen expressed caution regarding the company’s performance relative to initial expectations.
Wolfe Research Analyst Shweta Khajuria: Khajuria initiated coverage of The Trade Desk with an outperform rating and a $115 price target. She praised the company’s scalable business model, strong topline growth, and high margins. Khajuria highlighted The Trade Desk’s leadership in product innovation and its ability to leverage secular trends in CTV and retail media.
Conclusion
As the U.S. presidential election approaches, the political landscape is expected to exert significant influence on the advertising market and media strategies. The Trade Desk, along with other key players in the digital advertising space, is poised to benefit from increased political ad spending and the ongoing shift towards connected TV. Analysts are closely monitoring these developments and adjusting their forecasts and price targets in response to the evolving market conditions. The outcome of the election and its impact on media spending will be critical factors shaping the future performance of these companies, making the coming months a pivotal period for the advertising and media industries.