TTD WACC - Weighted Average Cost of Capital

The WACC of Trade Desk Inc (TTD) is 6.9%.

The Cost of Equity of Trade Desk Inc (TTD) is 10.85%.

The Cost of Debt of Trade Desk Inc (TTD) is 4.50%.

	Range	Selected
Cost of equity	9.10% - 12.60%	10.85%
Tax rate	28.90% - 43.20%	36.05%
Cost of debt	4.50% - 4.50%	4.50%
WACC	6.1% - 7.6%	6.9%

WACC

TTD WACC calculation

Category	Low	High

Long-term bond rate	3.9%	4.4%
Equity market risk premium	4.6%	5.6%
Adjusted beta	1.14	1.39

Additional risk adjustments	0.0%	0.5%
Cost of equity	9.10%	12.60%

Tax rate	28.90%	43.20%
Debt/Equity ratio	1	1
Cost of debt	4.50%	4.50%

After-tax WACC	6.1%	7.6%


Selected WACC	6.9%

TTD's CAPM model and how its cost of Equity is calculated

The Cost of Equity reflects the return a company needs to deliver to shareholders to justify the risk of investing in its shares. It’s computed using the Capital Asset Pricing Model (CAPM), which blends the risk-free rate, the stock’s beta, and the market risk premium.

This method evaluates the stock’s risk compared to a safe investment and the market’s overall volatility.

Here’s how we figure out the cost of equity for TTD:

cost_of_equity (10.85%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (1.14) + risk_adjustments (0.25%)

We include the risk adjustments, which range from 0% to 1%, to keep our WACC conservatives, especially for companies traded in developing markets.