Is The Trade Desk, Inc. overvalued or undervalued?

As of 9 May 2025, The Trade Desk, Inc. has moved from an expensive to a very expensive valuation grade. The company is currently overvalued, with a P/E ratio of 85, significantly higher than its peers, such as Palo Alto Networks, Inc. with a P/E of 104.86 and Cadence Design Systems, Inc. at 87.87. Additionally, The Trade Desk's EV to EBITDA ratio stands at 61.64, compared to the industry average of around 58.18, and its Price to Book Value is 12.93, indicating a premium valuation relative to its book value.
The company's PEG ratio of 0.84 suggests that while growth may be factored into the price, the overall valuation metrics indicate a lack of justification for the current stock price. Notably, The Trade Desk has underperformed against the S&P 500, with a year-to-date return of -41.40% compared to the index's 2.44%. This further reinforces the conclusion that The Trade Desk is overvalued in the current market environment.