Trade Desk, Inc. TTD shares traded higher Monday following reports of a possible merger with Roku, Inc. ROKU.
Analysts and investors are speculating on the potential strategic alignment between the two companies as the Trade Desk recently announced its entry into the connected TV (CTV) operating system market with its Ventura OS.
Here’s what you need to know.
What Happened: Michael Morris and his team at Guggenheim Securities emphasized that combining the Trade Desk’s demand-side platform with Roku’s operating system and streaming household footprint — estimated at more than 85 million globally — could yield mutual benefits. He stated that the merger would accelerate the Trade Desk’s OS ambitions while enhancing Roku’s ability to monetize its advertising inventory.
Morris also addressed the potential challenges of such a merger. He noted that Roku is a controlled company with CEO Anthony Wood holding a significant voting share, making his approval critical for any acquisition. Additionally, he pointed out potential conflicts of interest for the Trade Desk, particularly in ensuring fair treatment of advertising buyers if it were to acquire Roku’s The Roku Channel inventory.
Despite these challenges, Morris concluded the benefits of consolidation outweigh the risks. He suggested that a merger could create a stronger entity capable of competing with tech giants like Alphabet and Amazon, particularly in the growing international markets.
This speculation follows the Trade Desk’s announcement of its Ventura OS on Nov. 20, 2024, as part of its broader strategy to strengthen its presence in the CTV market. While there is no confirmation of strategic discussions between the two companies, the market’s reaction reflects optimism about the potential synergies a merger could bring.
The analyst also noted Ventura OS aims to address key challenges in the CTV ecosystem, including user experience improvements, streamlined advertising and supply chain enhancements. However, Guggenheim Securities stated that the OS would face significant barriers to adoption due to competition from incumbents like Roku, Alphabet and Amazon, as well as entrenched consumer preferences for existing platforms.
Morris highlighted that while Ventura OS represents a competitive threat to Roku, it also underscores the overlapping goals of both companies in the CTV advertising market. He noted Amazon and Alphabet’s vertically integrated dominance in the sector is a shared challenge for the Trade Desk and Roku.
TTD Price Action: Trade Desk shares closed Monday up 5.14% at $135.16, according to Benzinga Pro.
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