Fears of financial trouble in Turkey weighed on the market Friday. The Dow Jones Industrial Average (DJINDICES: ^DJI) and the S&P 500 (SNPINDEX: ^GSPC) both had significant declines.
Today’s stock market
Global stocks retreated on worries about Turkey, sending the Vanguard FTSE Developed Markets ETF (NYSEMKT: VEA) down 1.9%. The materials sector was the weakest among domestic issues; the Materials Select Sector SPDR ETF (NYSEMKT: XLB) fell 1.4%.
As for individual stocks, The Trade Desk (NASDAQ: TTD) reported another quarter of strong growth and Redfin (NASDAQ: RDFN) rocked the real estate sector with a downbeat prediction for U.S. housing.
The Trade Desk nails it again
The Trade Desk wowed investors with impressive second-quarter revenue and profit growth, sending shares soaring 37.1%. The supplier of programmatic advertising solutions saw revenue increase 54% to $112.3 million, beating the company’s target of $103 million. GAAP earnings per share came in at $0.43, with adjusted EPS of $0.60, well above analyst expectations for adjusted earnings of $0.44 per share.
Growth in mobile advertising was a big driver of the results. Mobile (in-app, video and web) grew 89% and now accounts for 45% of gross advertiser spend. But spend on connected TV, an advertising channel still in its early stages of growth, more than doubled from the previous quarter. Customer retention remained over 95% for the 19th straight quarter.
“We continued to see marketers spend disproportionately more with The Trade Desk as they look beyond the few search and social sites that historically captured the most advertising dollars,” said founder and CEO Jeff Green.
On the conference call, Green discussed how changes that Google is making in response to privacy concerns are opening up opportunities for The Trade Desk’s products, which don’t handle personally identifiable information. With new product launches in the quarter and a rapidly growing programmatic advertising market, The Trade Desk seems well-positioned for more robust growth ahead.
Redfin sees trouble ahead for housing market
Shares of real estate brokerage Redfin plummeted 22.4% after the company reported results that beat expectations but followed them with weak guidance, giving a downbeat outlook for the real estate industry in the U.S. Revenue increased 36% to $142.6 million and the company earned $0.04 per share, down from an adjusted result of $0.06 in the period a year earlier. Analysts were expecting the company to earn $0.02 per share on revenue of $138.8 million.
Redfin’s market share was 0.83% of U.S. existing home sales by value, an increase of 19 basis points over last year. Net income fell, however, from $4.3 million in Q2 last year to $3.2 million, largely because of a decline in gross margin from 35% to 32%. Some of Redfin’s newer businesses — such as mortgage and title and Redfin Now, its business of buying homes and reselling them — have lower margins in the early stages and their growth is affecting overall profitability.
What hurt Redfin stock and that of other companies in the industry were comments about slowing residential real estate sales in the U.S. The company said it saw an unexpected drop in bookings growth in the last three weeks, slowing traffic growth, and a weakening real estate market. “We expect U.S. home sales growth to slow and even perhaps reverse in August and September,” said CEO Glenn Kelman in the press release.
Third-quarter revenue is expected to be between $137.1 million and $141.3 million, compared with the analyst consensus of $141.2 million. Gross margin should have double the percentage point decline seen in Q2. The surprisingly grim short-term picture was enough to send investors packing today.
