Over the past two years, Magnite (NASDAQ:MGNI) has built its business by combining former independent companies Telaria, The Rubicon Project, SpotX, and SpringServe in an attempt to dominate the connected-TV (CTV) space. And given the outsized growth CTV is experiencing, it makes sense to grab market share in this way.
Just prior to this video clip from Motley Fool Backstage Pass, recorded on Nov. 1, Fool contributor Jon Quast shared some data with fellow contributor Jason Hall. According to eMarketer, Disney's Hulu and Roku are two of the top three ad-supported CTV channels by revenue. And in the video, Jon points out that these streaming services are both Magnite customers, giving him reason to believe the company can still be a winner going forward.
Jon Quast: Having two of the top three players in the CTV space, to me, speaks very well about Magnite's potential going forward and one of the reasons that I like it.
Jason Hall: I agree. If Danny has a chance to respond. I just want to say the reason I didn't rank it higher, is it's in a very competitive space. The fact that it had to make a lot of acquisitions to become the company it is, is something I'm watching really closely.
I talked about NV5 as a company that I love that's growing well through acquisitions. There's a very long track record of doing it well in that space. Magnite, I'm really watching that closely because it's not like Trade Desk, which is on the other side of the transaction, that is so strong and its relationships are so deep. It is the player. It doesn't need to acquire companies that have the relationships. It has them already where it sits.
That's my only concern with Magnite. I think the market is going the wrong way with it. I think it's given up over the past six months in the company and I think it's well worth a look right now for anybody who doesn't own it.
Quast: For those curious, this is the largest company, the largest position in my personal portfolio. That is a function of when I bought it. I bought in March and April of last year when it just absolutely got creamed. Up over 500% for me and it worked out OK.
Because of the things that you bring up, Jason, all these mergers and acquisitions are under two years old. There's still plenty of time for this to manifest itself that it's not working as good as what we would've hoped. There's still time for that to play out.
That risk still on the table, I would not have normally made this my largest position. However, I don't believe in selling winners and disrupting compounding unnecessarily. There's still plenty here to like. They haven't shown me that the acquisitions and mergers are going wrong. They still could, but so far we don't have the data that suggest that they are. Until that happens, I'm content to hold and not trim and that's just my...
Hall: This is a time to do it too when it's still a small business and it's a very fast-growing space that it's in a programmatic ads, Jon, so I agree, 100%.