Please ensure Javascript is enabled for purposes of website accessibility

Why Magnite Stock Dropped Today

By Evan Niu, CFA - Updated Jan 25, 2021 at 2:23PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Truist Securities downgrades the advertising tech specialist to hold.

What happened

Shares of Magnite (MGNI -1.57%) dropped by as much as 16% today after getting a downgrade from Wall Street. As of 2:40 p.m. EST, shares had somewhat recovered and were only down 9%.

So what

Truist Securities downgraded its rating on Magnite shares from buy to hold, while analyst Matthew Thornton adjusted his price target from $12 to $37 to accommodate for the recent rally. The jump has put Magnite's valuation into ambitious territory and altered the risk/reward profile. Current levels properly value the company's prospects, and the possibility of slowing growth in the second half of 2021 could create some risks, in Thornton's view.

Red stock chart going down

Image source: Getty Images.

The advertising technology stock had jumped to all-time highs on Friday after Craig-Hallum boosted its price target from $25 to $45.

Now what

Thornton boosted his forecasts but warned that growth in the second half of the year could decelerate to 12%, down from the 60% expected in the first half. Some of the recent growth has been due to the merger with Telaria, which closed last April. Additionally, the COVID-19 pandemic affected the advertising industry in mid-2020, which will create favorable year-over-year comparisons.

Magnite faces some other possible risks around the long-term take rate as well as potential concerns around data privacy, according to Thornton, but should continue to benefit from the shift of advertising budgets to connected-TV platforms. The company is scheduled to report fourth-quarter results on Feb. 24.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Magnite, Inc. Stock Quote
Magnite, Inc.
MGNI
$10.65 (-1.57%) $0.17

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
336%
 
S&P 500 Returns
115%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 06/26/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.