Why The Trade Desk Shares Crashed Despite Early Gains Today

Shares of The Trade Desk declined sharply during trading after Publicis Groupe said it would no longer recommend the company’s platform to clients.

The stock dropped 7.4 percent by the close and was nearly 12 percent below its intraday peak. Earlier in the session, the stock had gained 5.8 percent before reversing course following the announcement.

Publicis Groupe took the decision after completing an audit. According to a report by Ad Age, the audit found that The Trade Desk had violated its master services agreement in multiple ways. Publicis said the company had “improperly applied their DSP fee to other fees.”

The development adds to recent challenges for The Trade Desk. Other major advertising groups, including Dentsu and WPP, have already moved away from the company’s OpenPath supply optimisation product.

Publicis Groupe’s decision is expected to have a material impact given its scale in the global advertising market. The move has also raised concerns about The Trade Desk’s business practices and client relationships.

The company has not yet issued a response to the audit findings.

The stock has been under pressure over the past year. Shares are down more than 80 percent from their peak as growth has slowed and the company has missed its own projections.

The Trade Desk, a leading independent demand-side platform in digital advertising, is also facing increasing competition from Amazon, which has expanded its advertising business and DSP capabilities.

Recent insider buying by Chief Executive Officer Jeff Green had offered some support to investor sentiment. However, analysts note that structural issues in the business may require significant changes before confidence returns.