AppLovin and The Trade Desk face significant stock declines

The advertising technology market is growing rapidly, with a potential value nearing $1 trillion. Companies like AppLovin and The Trade Desk are key players, helping brands and publishers make money from their audience interactions. Recently, shares from both companies have faced significant declines, with AppLovin down 45% from its peak and The Trade Desk down 53% this year. Investors are now debating if these stocks are good to buy. AppLovin is strong in mobile advertising, especially for gaming apps. Their platform, the AppLovin Exchange, connects app publishers with advertisers to sell ad space effectively. A big factor in their recent success has been the use of AI through their AXON 2.0 engine, which helps optimize ad placements. Last year, their ad revenue rose 75%, and net income increased by 343%. For 2025, they expect 21% revenue growth and a 69% rise in earnings per share. AppLovin is also planning to enter new advertising markets like e-commerce and connected TV. On the other hand, The Trade Desk focuses more on ad buyers, including large brands and agencies. Their partnerships with companies like Disney and Netflix strengthen their competitive edge. In 2024, The Trade Desk's revenue grew by 26%, but this fell short of higher expectations from analysts. Despite this setback, the stock has become more appealing in terms of valuation, trading at a lower price-to-sales and price-to-earnings ratio compared to AppLovin. In summary, both AppLovin and The Trade Desk have strong potential for growth. However, AppLovin is seen as the stronger option right now due to its robust growth and expansion plans. Investors may want to consider AppLovin for a diversified investment approach.