The hits keep coming for adtech firm The Trade Desk.
Netflix on Wednesday said it had entered a partnership with Amazon to let advertisers use the Amazon DSP to buy ads on Netflix starting in the fourth quarter. The Amazon DSP, or demand-side platform, is a self-service software that lets advertisers plan and buy ads across Amazon’s properties and other apps and websites.
The Amazon DSP is a direct competitor to The Trade Desk, a pure-play public adtech company. The rivalry between the pair has been heating up following years of quiet investment from Amazon as part of a strategy to eventually overtake The Trade Desk and Google to become the world’s No. 1 DSP.
Amazon has been elbowing in on key media partnerships that had given The Trade Desk — which is also a Netflix DSP partner — its edge in the fast-growing connected-TV space. Amazon recently signed similar deals with Roku and Disney, for example.
On Wednesday, analysts at Morgan Stanley downgraded The Trade Desk’s stock to equal-weight from overweight and pared down their price target for the stock to $50 from $80.
In a note to clients sent before the Netflix deal was announced, Morgan Stanley’s analysts cited “lingering execution concerns, softness in the open web ad market, and intensifying competition in CTV,” noting the recent growth of Amazon DSP specifically.
The Trade Desk shares were trading down over 10% on Wednesday. The stock is down over 60% year to date.
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Jeff Green, The Trade Desk CEO, said on the company’s August earnings call that “Amazon is not a competitor” — though he doesn’t appear to have convinced the analyst community that his assertion carries much weight.
“It is glaringly obvious The Trade Desk is under attack,” analysts at Lightshed Partners wrote in a note on Wednesday, covering the Amazon-Netflix partnership.
A spokesperson for The Trade Desk said the company has always believed in an open and competitive marketplace. Advertisers can also buy Netflix ads via Yahoo, Google, and Microsoft’s ad-buying platforms.
“We are often an early partner for good reason, and we hope we are a catalyst for a sustainable open ecosystem with competition,” The Trade Desk spokesperson said in a statement. “We believe that the more open and competitive the market is, the greater our opportunity to win.”
