HSBC has moved to downgrade The Trade Desk (TTD), taking the stock from Hold to Reduce and lowering its price target to $20 from $31 in a note released on Monday. The adjustment reflects what the bank describes as a notably tougher outlook for the ad tech company since its 2016 initial public offering.
Analyst Mohammed Khallouf pointed to a combination of fraying ties with major global ad agencies, heightened competition across the DSP marketplace, and an AI-based advertising opportunity that remains unproven. Those factors, HSBC says, have combined to create the company's most challenging backdrop since it listed.
HSBC underlined Trade Desk's second-quarter revenue guidance of around 8% year-on-year growth as an illustration of the pressure the business is confronting. That rate, the bank noted, would be the slowest since the company's 2016 listing and signals stress beyond structural issues already known to investors.
Khallouf emphasized agency relationships as a central concern, writing that "What we failed to appreciate at the time... are the additional second-order impacts on TTD's relationships with its partner global ad agencies." HSBC highlighted that agency partners represent more than 40% of Trade Desk's billings, making those relationships a material business input.
The bank called out Publicis's decision to curtail use of Trade Desk's platform over transparency concerns, and said that move was in part a reaction to "a DSP market that has grown vastly more competitive." HSBC added that ongoing negotiations between Trade Desk and its agency partners are "unlikely [to be] win-win, in our view, given the strengthened agencies' hand," and that this dynamic raises downside risk to both ad spend volumes and the platform's take rates.
On the AI front, HSBC flagged OpenAI's May 5 launch of a self-service advertising product that uses a cost-per-click bidding model. The bank said that product moves OpenAI closer to what it called the "Walled Garden" BigTech approach to advertising, a development that could limit the scope for any meaningful partnership between Trade Desk and larger technology platforms.
In response to these pressures, HSBC reduced its 2026-2027 revenue forecasts by 3% to 5% and lowered its adjusted EPS estimates by 14% to 17%. The bank also applied a reduced 6.0 times target multiple to its revised 2027 EBITDA estimate of $1.38 billion.
Context note: The bank's review combines operational signals from revenue guidance, the material role of agency billings, competitive shifts in the DSP market, and the potential strategic implications of new AI-driven ad products.