For investors who were burned in recent years by ad tech, The Trade Desk has represented a rare winning bet. That's been even more true in the four months since the coronavirus pandemic forced millions of Americans to stay home.
The Trade Desk said earlier this year it expects to reach well over 80 million households via connected TV in the U.S. in 2020. The company says spending in the sector was up 100% in the first quarter from a year earlier.
The Trade Desk's technology helps brands and agencies reach targeted audiences across media formats and devices, and the company has a particularly strong presence in the connected TV (CTV) market. CEO Jeff Green said on the company's earnings call in May that while The Trade Desk had viewed the transition to CTV as a multiyear story, "the last eight to 10 weeks have changed all of that."
With more people in their living rooms streaming shows and movies, The Trade Desk has seen more opportunities to show them ads on platforms like Disney's Hulu, Sling, Tubi, NBCUniversal and ESPN as well as third-party content on Amazon Fire TV. Investors anticipating continued growth have pushed the stock up 64% this year, while the S&P 500 is about flat. The Trade Desk is now valued at close to $20 billion.
"I believe that the media landscape has changed forever, starting in the middle of March," Green said on the earnings call. "The biggest loser in all this is traditional linear television, and CTV is without a doubt the biggest winner."
For its next stage of growth, The Trade Desk is making some key executive changes and hires. Tim Sims, a six-year company veteran, has been elevated to chief revenue officer from senior vice president of inventory partnerships. Green said Sims has been at the forefront of the shift to connected television, working with advertisers and broadcasters. He'll now have the sales team under his purview.
"The Trade Desk had its origins in display media and desktop video, and then we've expanded into new channels like audio and now connected television is becoming a bigger and bigger part of the mix of how clients are looking to use our platform," Sims told CNBC in an interview this week.
The Trade Desk also hired Michelle Hulst from Oracle's cloud group as executive vice president of global data and strategy, and promoted Matt Goldberg to executive vice president of global operations from his role as executive vice president of North America.
Analysts agree with The Trade Desk's assessment that Covid-19 is pushing the market in a way that benefits the company.
"We continue to believe Covid-19 has acted as a negative catalyst to the TV marketplace and are expecting to see permanent changes which are likely to favor digital and CTV," Pivotal Research's Michael Levine wrote in a note this week.
Needham analysts wrote last month that the current economic situation resembles the financial crisis of 2008 to 2009, when there was an "advertising melt-down." Eventually, companies consolidate their ad spending in the places that provide the best return on investment.
"At first, all advertisers cut back ad spending to save money and conserve cash, owing to a spike in uncertainty," the Needham analysts wrote. "As large advertisers ramped up ad spending after the 2009 crisis, they demanded more data-driven metrics tied to ad spending ROIs."
They also wrote that The Trade Desk, along with Roku, will benefit from $70 billion a year of TV ad spending potentially moving to connected TV. For The Trade Desk, they estimate that about one-fifth of revenue came from CTV in 2019, a figure they believe should increase in 2020 as more money gravitates over from traditional TV.
Disclosure: NBCUniversal is the parent company of CNBC and CNBC.com.
— CNBC's Michael Bloom contributed to this report.