Saga Partners: The Trade Desk ($TTD) Investment Case

In their Q1 2026 investor letter, Saga Partners — led by Joe Frankenfield — uses The Trade Desk as the centerpiece example of how the firm evaluates steep stock declines and distinguishes temporary headwinds from structural impairment. The firm first purchased The Trade Desk in 2017 on the thesis that programmatic ad buying would grow, demand-side platforms (DSPs) would consolidate into a handful of scaled winners, and one of those winners would be an independent platform. With the stock experiencing one of the largest drawdowns in the portfolio amid heightened market skepticism, Saga sees the current dislocation as a potential mispricing — not evidence that the long-term thesis has broken down.

Investment Highlight: The Trade Desk ($TTD)

Business Overview

• Saga Partners describes The Trade Desk as the leading scaled independent demand-side platform (DSP) for programmatic advertising across the open internet
• The firm notes the company processed roughly $13 billion in ad spend over its platform in the most recent year, which it views as still only a fraction of the broader open internet advertising market
• Saga characterizes the business not simply as a software provider but as core infrastructure for advertising buyers across the open internet

Why the Stock Has Sold Off

• Saga acknowledges that The Trade Desk’s growth slowed in 2025, prompting the market to question whether the deceleration is temporary or signals something more structural
• According to the firm, the market’s main concerns center on increasing competition — particularly from Amazon’s DSP — and the possibility that AI could erode The Trade Desk’s competitive position
• Saga observes that slower growth led investors to attribute more of the slowdown to competitive and AI-driven threats rather than near-term headwinds, causing them to question the durability of the company’s competitive advantages more directly

Competitive Position: The Independent DSP Advantage

• Saga believes the value proposition of an independent DSP remains structurally intact: many advertisers still need a neutral tool to buy advertising across the open internet, which the firm views as a durable advantage relative to walled-garden DSPs
• While the firm acknowledges Amazon may continue building a strong advertising business, Saga argues that does not make Amazon the best partner for buying across the broader open internet
• According to Saga, a more serious long-term threat would be the emergence of another scaled independent DSP capable of taking meaningful share — and the firm sees no evidence of that happening, believing it would be very difficult to replicate at scale

AI: Threat or Tailwind?

• Saga views the AI risk as largely misunderstood by the market, arguing that if AI improves how campaigns are planned, optimized, and measured, it could strengthen rather than weaken The Trade Desk’s value
• The firm reasons that advertisers would still need a system to coordinate budget allocation, data integration, measurement, and execution across the fragmented open internet regardless of how much automation improves
• Saga also suggests that greater automation could make the product easier to use and help it move further down market by serving smaller and mid-sized advertisers more effectively

Valuation

• With a market capitalization of roughly $10 billion, approximately $1.3 billion of net cash at year-end, and the ability to generate nearly $1 billion in free cash flow this year, Saga believes the market is pricing in a level of pessimism the firm finds difficult to reconcile with the company’s long runway to grow earnings power
• The firm views the current valuation as unusually attractive given what it sees as limited change in the company’s core value drivers and long-term opportunity size
• Saga draws a parallel to its Carvana experience in 2022 — not because the businesses are similar, but because in both cases the firm saw market sentiment deteriorate far beyond its long-term estimate of underlying value, creating what it viewed as a compelling mispricing

Conclusion Saga Partners views The Trade Desk as a business whose core long-term thesis remains intact despite a sharp decline in its share price. The firm believes competition from Amazon does not undermine the structural case for an independent DSP, and sees AI as more likely to strengthen than disrupt The Trade Desk’s platform over time. With the company still commanding a leading position in open internet advertising and the market implying what Saga considers undue pessimism, the firm views current prices as offering an attractive long-term entry point for patient capital.

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