The Trade Desk Faces Class Action Lawsuit Over AI Tool Rollout Challenges

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On Thu, 20 Feb, 8:11 AM UTC

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Multiple law firms announce class action lawsuits against The Trade Desk, Inc. for alleged misleading statements about the rollout of its AI-powered advertising tool, Kokai.

Class Action Lawsuit Filed Against The Trade Desk

The Trade Desk, Inc. (NASDAQ: TTD), a prominent technology company offering a cloud-based ad-buying platform, is facing multiple class action lawsuits over alleged misleading statements regarding the rollout of its artificial intelligence (AI) tool, Kokai 12345.

Allegations of Misleading Statements

The lawsuits, filed by various law firms including Robbins Geller Rudman & Dowd LLP and Rosen Law Firm, allege that The Trade Desk and its top executives made false and misleading statements during the period between May 9, 2024, and February 12, 2025 13. The primary allegations include:

  1. The company experienced significant, self-inflicted execution challenges in rolling out Kokai, particularly in transitioning clients from its older platform, Solimar 24.
  2. These execution challenges substantially delayed the Kokai rollout 35.
  3. The company's inability to effectively execute the Kokai rollout negatively impacted its business operations and revenue growth 14.

Financial Impact and Stock Price Drop

On February 12, 2025, The Trade Desk announced its financial results for the fourth quarter and full year of 2024 2. The company reported:

  • Fourth-quarter revenue of $741 million, below the previously issued guidance of $756 million and analysts' estimates of $759.8 million 13.
  • Revenue guidance of at least $575 million for the first quarter of 2025, missing analysts' estimates of $581.5 million 24.

Following this announcement, the price of Trade Desk Class A common stock reportedly fell by more than 32% 15.

Legal Proceedings and Investor Rights

The class action lawsuits have been filed on behalf of purchasers of The Trade Desk's Class A common stock during the specified period 34. Key points for affected investors include:

  • The deadline to seek appointment as lead plaintiff is April 21, 2025 12345.
  • Investors who suffered substantial losses are encouraged to contact the law firms for more information 24.
  • The Private Securities Litigation Reform Act of 1995 allows any investor who purchased the stock during the Class Period to seek appointment as lead plaintiff 13.

About Kokai and Its Significance

Kokai, launched on June 6, 2023, is a generative AI forecasting tool designed to enable users to more effectively deploy advertising spending 24. The tool was positioned as a significant advancement in The Trade Desk's offerings, making the alleged challenges in its rollout particularly impactful for the company's market position and investor confidence 135.

Broader Implications for AI in Advertising

This case highlights the challenges and risks associated with implementing AI technologies in the advertising industry. It underscores the importance of effective execution and transparent communication when rolling out advanced AI tools, especially for publicly traded companies where such developments can significantly impact stock performance and investor relations 345.

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