There are contrasts between the streaming business stocks: Roku stock (NASDAQ:ROKU) and ad-tech platform The Trade Desk stock (NASDAQ:TTD), but digital advertising is at the heart of what they both do.
Given this, which of these two stocks is a better purchase right now? Let’s investigate to find out.
Stock Comparison: Roku is Outperforming The Trade Desk.
Looking at revenue estimates from Roku and The Trade Desk, you can see the expectation of difficult times ahead. Roku anticipates third-quarter sales of $700 million, a $20 million (approximately 3%) increase over 2021 Q3 revenue. Compared to a year earlier, when Roku’s 2021 Q3 sales of $680 million marked a 51% year-over-year rise, this suggests a significant deceleration. In contrast, The Trade Desk anticipates $385 million in sales for the third quarter of 2022, a 28% increase over the prior year’s third quarter. The $301 million in sales produced by The Trade Desk during the third quarter of 2021 was a 39% increase over the same period in 2020, indicating that growth is slowing for The Trade Desk, although not nearly as much as Roku’s.
In addition, The Trade Desk is a considerably more lucrative company than Roku. The Trade Desk is a demand-side ad platform that assists businesses in setting up and running ad campaigns; it is a software company with acceptable gross margins of over 82%. The firm has already grown big enough to create positive free cash flow; compare that to Roku’s below.
Roku has developed its demand-side ad platform, Roku OneView, although it is not a pure software company. Consumers may enter the Roku ecosystem by purchasing hardware goods such as dongles and streaming sticks from the firm. Roku sells them at a loss on purpose, which has only become worse as inflation has raised manufacturing costs. In the second quarter, Roku’s gross margin for its hardware division was negative 24%. This lowers everything down, but Roku’s total gross margins are still a reasonable 48% and could rise as the ad platform expands.
Both Stocks- Which is Better: The decision
An investor might purchase The Trade Desk stock (NASDAQ:TTD), which is expected to do well in the following years. It is an industry leader that thrives as an independent platform as opposed to the “walled garden” advertising methods used by firms such as Meta Platforms and Alphabet. It would be an excellent purchase. However, at this price, I believe Roku stock (NASDAQ:ROKU) is too good to pass up and is now the superior choice.
Featured Image- Megapixl @ Adodonov
Author Okoro Chinedu 
