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The Growth Stock Rout Isn't Over for These 2 Companies | The Motley Fool

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AccessibilityLog InHelpJoin The Motley FoolAccessibility MenuJoin Over Half a Million Premium Members And Get More In-Depth Stock Guidance and ResearchBy Dan Caplinger–Nov 10, 2023 at 9:23AMMarket Cap$38BToday's Change(-2.58%)&nbsp;-$2.03Current&nbsp;Price$76.81Price as of November 9, 2023, 4:00 p.m. ETYou’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn MoreOne thing that the current earnings season has shown is that it sometimes doesn't matter if companies meet the expectations that investors say they have about their financial results. In the current market environment, if a company can't show that it will grow its business quickly even despite the macroeconomic pressures across the globe, the stock price is vulnerable to steep declines.That dynamic played out for a couple of companies on Friday morning. Even as major market index futures moved higher in the premarket session, shares of The Trade Desk and Unity Software plunged. Below, you'll learn more about what caused shareholders in these two tech-oriented companies to lose confidence and what the future might bring for them.Shares of The Trade Desk plummeted 24% in premarket trading early Friday. The programmatic advertising-tech company reported third-quarter financial results that were generally better than many had expected, but its guidance for the remainder of the year raised serious doubts about the sustainability of its past growth rates.The third quarter was a strong one for The Trade Desk. Revenue of $493 million grew 25% year over year, and adjusted net income climbed 29% to $167 million. Adjusted earnings of $0.33 per share came in ahead of expectations. The Trade Desk also pointed to strong customer retention numbers.Fundamentally, The Trade Desk is achieving many of its goals. Its Unified ID 2.0 standard is gaining traction across the industry, and its OpenPath premium publisher marketplace is connecting advertisers to more than 11,000 connected TV, mobile, display, and audio ad destinations.Yet investors reacted negatively to The Trade Desk's guidance for fourth-quarter revenue of $580 million, which suggested a slowdown in annual growth to just 18%. Given the trillion-dollar opportunity in programmatic advertising, shareholders expected The Trade Desk's hypergrowth path to last longer, and signs that it might not were highly disappointing.Elsewhere, shares of Unity Software were down 12% early Friday. The maker of the Unity Engine video game development platform reported third-quarter financial results that failed to build confidence after a tough period for the company.Unity's numbers were mixed. Revenue of $544 million was up 69% year over year, but most of those gains came from its acquisition of ironSource, without which pro forma sales were up just 8%. Adjusted pre-tax operating earnings climbed 24% from year-ago levels, though, and free cash flow came in at $104 million.Unity's game-creation segment was relatively weak, as restrictions by the Chinese government weighed on that side of the business. However, the growth-solutions segment, which helps game developers monetize the video games they create, saw continued sharp revenue gains. Despite the introduction of runtime fees that generated so much controversy recently, Unity said that the revenue softness resulting from that move "is now mostly behind us."Yet Unity shareholders are feeling even more uncertain about the future because the company is still working on its internal assessment of its products and services. Unity believes it will be able to act quickly to align opportunities with a viable cost structure and implement a plan by early 2024. In the interim, though, Unity chose not to offer any guidance for the fourth quarter or for the 2023 year as a whole. Investors don't like being in the dark, and until Unity shares more details about its plans, the stock could have trouble rebounding.Get Started NowThese 2 Adtech Stocks Could Be Signaling a RecoveryFeeling Lazy? Here's Why That Could Make You a Better InvestorWhy Did The Trade Desk Stock Jump 10% Last Month?These 2 Nasdaq Tech Stocks Look Sharper Than EverNasdaq Surges After Inflation Data: Why the Top Tech and Growth Stocks Moved HigherMarket-beating stocks from our award-winning analyst team.Stock Advisor Returns492%&nbsp;S&amp;P 500 Returns126%Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 11/10/2023.Discounted offers are only available to new members. Stock Advisor list price is $199 per year.Cumulative Growth of a $10,000 Investment in Stock AdvisorCalculated by Time-Weighted Return since 2002. Volatility profiles based on trailing-three-year calculations of the standard deviation of service investment returns.Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.View Premium ServicesCurrent

AccessibilityLog InHelpJoin The Motley FoolAccessibility MenuJoin Over Half a Million Premium Members And Get More In-Depth Stock Guidance and ResearchBy Dan Caplinger–Nov 10, 2023 at 9:23AMMarket Cap$38BToday's Change(-2.58%)&nbsp;-$2.03Current&nbsp;Price$76.81Price as of November 9, 2023, 4:00 p.m. ETYou’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn MoreOne thing that the current...

The Growth Stock Rout Isn't Over for These 2 Companies | The Motley Fool

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