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The Trade Desk, Inc. (TTD) Intrinsic Value

DCF-based fair value calculation with Bear, Base, and Bull scenarios

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The Trade Desk, Inc. (TTD)

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Intrinsic Value (DCF)

Current$36.90
→
Intrinsic$46.63
+26%
$32.42$46.63$73.59
Market implies 19% growth for 5 years
TTD shows 26% potential upside using 25% growth — reasonable if fundamentals hold.
At $37, the market prices in continued high-teens cash flow growth (19%) — likely reflecting buybacks, margin stability, and ecosystem strength.
Range: Bear $32 → Bull $74. Current price implies expectations below the base case, but well above the bear case.
Discount ↓Growth →21%23%25%27%
8%$57$61$66$71
10%$40$43$47$50
12%$31$34$36$38
14%$26$27$29$31

Bull Case

  • Bull case ($74) offers 99% upside at 30% growth, 9% discount
  • 21% margin of safety vs. base case estimate
  • Market-implied growth (19%) ≤ historical CAGR (25%)

Bear Case

  • Bear case ($32) implies 12% downside at 20% growth, 12% discount
  • Using 25% growth — aggressive, watch for mean reversion
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5-Year Free Cash Flow Projection

Year 1$790.49M
Year 2$988.12M
Year 3$1.24B
Year 4$1.54B
Year 5$1.93B
Terminal$28.40B

📐 Model Inputs

Growth Rate25.0%5Y CAGR (cascade: 5Y→3Y→TTM)
Discount Rate10.0%WACC estimate
Terminal Growth3.0%Perpetuity rate
Base Free Cash Flow$632.39MTTM actual
Bear g×0.8, r+2%
Base Historical CAGR
Bull g×1.2, r−1.5%
ℹ️

DCF estimates based on historical growth rates extrapolated forward. See FAQ below for full methodology.

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Frequently Asked Questions

Is TTD stock undervalued or overvalued?
🟡 FAIRLY VALUED

TTD trades at $36.90, within 10% of our $38.99 intrinsic value estimate. At 10.0% WACC and 25.0% FCF growth, the market is pricing in assumptions roughly aligned with the 5-year historical CAGR. The valuation range spans $26.30 (bear) to $57.68 (bull).

What is TTD's intrinsic value?

Using a 5-year DCF model: Base FCF of $632M, projected at 25.0% 5Y CAGR (best of revenue, EPS, or FCF growth), discounted at 10.0% WACC, with 3.0% terminal growth. Terminal value calculated via Gordon Growth Model: TV = FCF₅ × (1+g) / (WACC−g). After deducting $-1.06B net debt and dividing by 0.50B shares: Bear $26.30 | Base $38.99 | Bull $57.68. Current price $36.90 implies -2% to base case.

How is TTD's fair value calculated?

DCF Methodology:

① Project FCF years 1-5 using 25.0% growth derived from 5-year historical CAGR (best of revenue, EPS, or FCF growth, with 8% floor and 25% cap).

② Calculate terminal value at year 5 using perpetuity growth model with g=3.0%.

③ Discount all cash flows to PV using WACC=10.0%.

④ Sum PV of explicit period + PV of terminal value = Enterprise Value ($18.51B).

⑤ Subtract net debt, divide by shares outstanding.

Sensitivity analysis available above—adjust WACC ±2% or growth ±3% to stress-test the valuation. Implied EV/FCF multiple: 29.3x.