Comparing Direct Digital (NASDAQ:DRCT) & Trade Desk (NASDAQ:TTD)
by Kim Johansen · The Markets DailyTrade Desk (NASDAQ:TTD – Get Free Report) and Direct Digital (NASDAQ:DRCT – Get Free Report) are both communication services companies, but which is the superior stock? We will compare the two companies based on the strength of their earnings, institutional ownership, risk, analyst recommendations, valuation, dividends and profitability.
Profitability
This table compares Trade Desk and Direct Digital’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| Trade Desk | 13.61% | 16.09% | 6.90% |
| Direct Digital | -74.38% | N/A | -68.48% |
Analyst Ratings
This is a summary of current ratings and price targets for Trade Desk and Direct Digital, as reported by MarketBeat.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Trade Desk | 10 | 25 | 4 | 0 | 1.85 |
| Direct Digital | 1 | 0 | 0 | 0 | 1.00 |
Trade Desk presently has a consensus target price of $19.36, suggesting a potential upside of 38.09%. Given Trade Desk’s stronger consensus rating and higher possible upside, equities research analysts clearly believe Trade Desk is more favorable than Direct Digital.
Institutional and Insider Ownership
67.8% of Trade Desk shares are held by institutional investors. Comparatively, 4.0% of Direct Digital shares are held by institutional investors. 11.4% of Trade Desk shares are held by insiders. Comparatively, 25.6% of Direct Digital shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.
Valuation and Earnings
This table compares Trade Desk and Direct Digital”s revenue, earnings per share (EPS) and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| Trade Desk | $2.90 billion | 2.27 | $443.30 million | $0.84 | 16.69 |
| Direct Digital | $34.69 million | 0.04 | -$18.95 million | ($156.85) | -0.01 |
Trade Desk has higher revenue and earnings than Direct Digital. Direct Digital is trading at a lower price-to-earnings ratio than Trade Desk, indicating that it is currently the more affordable of the two stocks.
Risk and Volatility
Trade Desk has a beta of 1.01, meaning that its share price is 1% more volatile than the S&P 500. Comparatively, Direct Digital has a beta of 5.3, meaning that its share price is 430% more volatile than the S&P 500.
Summary
Trade Desk beats Direct Digital on 12 of the 14 factors compared between the two stocks.
About Trade Desk
The Trade Desk, Inc. operates as a technology company in the United States and internationally. The company offers a self-service cloud-based platform that allows buyers to plan, manage, optimize, and measure data-driven digital advertising campaigns across various ad formats and channels, including video, display, audio, digital-out-of-home, native, and social on various devices, such as computers, mobile devices, televisions, and streaming devices. It provides data and other value-added services. The company serves advertising agencies, brands, and other service providers for advertisers. The Trade Desk, Inc. was incorporated in 2009 and is headquartered in Ventura, California.
About Direct Digital
Direct Digital Holdings, Inc. operates as an end-to-end full-service programmatic advertising platform. The company's platform primarily focuses on providing advertising technology, data-driven campaign optimization, and other solutions to underserved and less efficient markets on both the buy- and sell-side of the digital advertising ecosystem. It serves various industry verticals, such as travel, healthcare, education, financial services, consumer products, and other sectors with a focus on small and mid-sized businesses. The company was founded in 2018 and is headquartered in Houston, Texas.