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Why Magnite Stock Is Up Sharply Again Today

By Daniel Sparks - Dec 23, 2020 at 1:02PM

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This ad-tech company has been growing on both analysts and investors.

What happened

Shares of Magnite ( MGNI 1.03% ), the world's largest independent sell-side ad tech platform, are rising sharply again on Wednesday, extending a strong run-up in the stock price over the past week. The stock rose as much as 22% but is up about 18% as of 12:20 p.m. EST.

The tech stock's gain builds on momentum following increased bullishness for the stock from analysts. Analysts' optimism for the company has been growing as they recognize the company's potential as the leading sell-side platform (SSP).

A chart showing a stock price rising

Image source: Getty Images.

So what

In total, shares of Magnite have risen more than 60% over the past five trading days. The stock has gone from trading around $20 to more than $30.

Magnite shares have benefited from three extremely bullish analyst takes recently, the first of which was on Nov. 30.

  • Late last month, Craig-Hallum analyst Jason Kreyer reiterated a buy rating on the stock and increased his 12-month price target from $16 to $25.
  • Last week, Susquehanna analyst Shyam Patil initiated coverage of the stock with a positive rating and a $30 price target.
  • This week, Needham analyst Laura Martin maintained a buy rating for the stock and increased her price target from $18 to $30.

The analysts largely cite the company's independence, scale, positioning in the connected TV (CTV) advertising market, and its valuation as reasons to be bullish on the stock.

Now what

Magnite is the result of a merger earlier this year of Telaria and Rubicon Project -- two SSPs that were each leading in different parts of the SSP ad-tech space. By merging, the two tech companies believed they could double-down on the opportunity in CTV while using their leading scale to their advantage.

Investors have been cheering the company's momentum in CTV. Magnite said in a Nov. 17 press release that eight of the company's top 10 demand-side platforms more than doubled their CTV spend on its platform year over year, with all 10 of these DSPs increasing spend. 

Total revenue growth, however, has slowed during the pandemic. But management has indicated that it expects growth to accelerate as the economy reopens and businesses start spending more money on advertising.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

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Stocks Mentioned

Magnite, Inc. Stock Quote
Magnite, Inc.
MGNI
$18.63 (1.03%) $0.19

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