I’ve had a bunch of new questions about this almost evergreen Motley Fool ad for their Stock Advisor service, so I thought I’d share some answers with you here — partly because this is a stock that I write about a lot for our paying members, since it’s a substantial part of my portfolio, but I haven’t shared my thoughts on it for “free” members in over a year.
So what’s the stock?
This is one of the Fool’s “home run” or “double down” alerts — an ad that’s not dated, but that makes the point that the relatively few stocks that get recommended by both of the Gardner brothers at the Motley Fool are unusually great stocks (the brothers are David and Tom, who together founded the Fool and run both the company and the flagship Motley Fool Stock Advisor). This is what they say about that “indicator”:
“It’s rare that David and Tom formally agree on the exact same stock – it’s only happened 23 times over the entire history of Motley Fool Stock Advisor.
“But when it has happened, the results have been spectacular:
“Netflix is up 12,862% since Tom agreed with David on it in June 2007
“Tesla, which received the “Home Run Buy” sign in November 2012, is up 835%
“In fact, across the 23 stocks David and Tom have agreed on … the average return is an astounding 912% … crushing the S&P 500 by more than 11x!”
So what’s the latest “home run” stock?
Here are the clues:
“… neither David or Tom would ever describe this stock as a ‘sure thing,’ but the details behind this tiny little internet company are impressive:
“It’s smaller than 1/100th the size of Google.
“Each one of David’s and Tom’s recommendations of its stock is crushing the market.
Its young CEO has already banked $575 million on this stock since its IPO.”
That’s a poor choice of words, I’d say — “banked” implies that you’ve made a ton of money and put it in, well, a bank, at least metaphorically. That’s not what this “young CEO” has done, he just owns a lot of the stock because he founded the company, and has seen it increase in value dramatically as the stock has risen. He’s “betting on” the company to the extent that he hasn’t sold all those shares, but he also isn’t buying — and has, in fact, sold thousands of shares that he’s been granted by the company as compensation over the years.
What does the company do?
“This company stands to profit as more and more people ditch cable for streaming TV….
“… sits in the middle of the advertising market, which is more than 10X bigger than the online streaming industry….
“In an interview with Tom Gardner and his team, this company’s CEO called the current moment ‘the most exciting in the history of advertising.'”
And we get a reiteration of that “he’s got skin in the game” idea:
“this CEO is putting his money where his mouth is.
“He’s betting his fortune – $575,715,640 to be exact – on what he’s calling cable TV’s ‘ticking time bomb.'”
So yes, this is, of course, good ol’ The Trade Desk (TTD).
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And we’ve seen the Motley Fool recommend and re-recommend this stock many times over the past couple years — I first nibbled on the shares back in the fall of 2017 when Tom Gardner was pitching the shares, and it was the best teaser stock of 2018.
The Trade Desk provides a data-fueled programmatic ad-buying software and access to purchasing (and monitoring) ads for the “open internet” (as opposed to the “walled gardens” of Google and Facebook), and they’re growing in all the areas that other advertising folks are growing, with huge volume in things like in-app advertising and mobile video, but they are also growing very fast in streaming — placing ads in services like Hulu, which they think is a major growth area (the argument being that advertising dollars will grow in importance for streaming services as they compete and as customer acceptance of higher and higher subscription fees to fuel content creation will be limited). Their customers are major advertisers and ad agencies, and they place themselves in the middle as a disinterested gatekeeper — they don’t own the conten