The pre-market leading to the morning bell on March 5, as well as the day’s regular session, saw the Trade Desk (NASDAQ: TTD) 18.36% from a preceding close at $25.17 to the stock’s latest close at $29.79.
Alicia Reese, an expert with the Wall Street analyst firm Wedbush, however, was neither impressed with the rally nor the driving force behind it: a new deal with OpenAI.
Indeed, in a note issued early on March 6, Reese downgraded TTD stock from its previous ‘Neutral’ rating to ‘Underperform’ – ‘Sell’ – while simultaneously lowering the 12-month price target to $23.
According to the analyst, the new, 22.79% forecasted decline is driven by the opinion that the market overestimated the impact of the alleged deal in the short and mid-term.
Nonetheless, the Wedbush expert was positive about the wider impact of the agreement, considering it ‘a vital long-term strategic move against AI search cannibalization.’
Wall Street weighs in on TTD stock
Zooming out, Wedbush is now the most bearish Wall Street firm with regard to the Trade Desk that has issued a rating and price target revision update since March 5.
For example, the other three updates issued on Thursday – the ones from D.A. Davidson, Huber Research, and Evercore ISI – all came with a ‘Buy’ recommendation.
D.A. Davidson did not, however, provide a TTD stock price target, while Huber Research forecasted a rally to $40, and Evercore ISI to $35.
The last of the three, however, was also curious since the new price target of $35, despite being bullish, represents a massive drop from the previously predicted $70.
Why TTD stock soared 18% in a day
Elsewhere, the driving force behind the Trade Desk stock rally ended with the closing bell on March 5 – TTD shares are 2.65% down at $29 in the March 6 pre-market – came in the form of an alleged agreement with OpenAI.
Specifically, the artificial intelligence (AI) company is seeking to utilize the Trade Desk in its drive to automate sales through the large language model (LLM) platform ChatGPT.
The move has been controversial due to the fears it might further skew responses from the AI, worsening the situation already caused by the model’s frequent hallucinations. It is, nonetheless, also part of a greater drive to monetize the platform.
Sam Altman has also, despite initially expressing vocal opposition to the idea, begun integrating advertisements with the chatbot.
Featured image via Shutterstock
