A little-known technology stock could win big from Netflix ‘s shift in advertising strategy. The streaming giant announced Wednesday that it plans to debut its own advertising platform and partner with companies such as The Trade Desk and Magnite as its global ad-tier reaches 40 million monthly subscribers worldwide. “Overall, we continue to believe Trade Desk holds a unique position within the [connected TV] landscape, and this announcement, along with the recent Roku, Disney+, and NBCU announcements, confirm our thesis that TTD is a long-term winner in this secular growth market,” wrote Piper Sandler analyst Matt Farrell, viewing the partnership as an additional data point the company can use to “maximize value for advertising tiers.” Farrell has a $110 price target on the stock, reflecting about 22% upside from Wednesday’s close. Shares added 5% during Thursday’s session and have rallied more than 30% year to date. While the partnership may take time to ramp up, Citi’s Ygal Arounian estimates that it could add $500 million in 2025 gross billings to The Trade Desk. Elsewhere, Morgan Stanley’s Matthew Cost estimates that Netflix will yield $3 billion in advertising-based video on demand. Every 10% of business funneled through The Trade Desk by 2026 could generate 2% upside to revenues, he estimates. TTD YTD mountain Shares this year “We recognize TTD’s competitive position as well as its low variable costs and B2B business model,” Cost wrote. “We also highlight TTD’s scarcity value as the only scaled independent [demand-side platform] and its leadership in the highly-coveted CTV category.” UBS analyst Chris Kuntarich views the deal as the start of longer-term deal tailwinds for the company. “Bottom line, when we initiated back in Sept we saw a NFLX/TTD as a potential catalyst this year, but it was only one part of the bull case,” he wrote, noting that investors need to assign a non-zero probability to a potential deal between The Trade Desk and Amazon, which could offer further upside.
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