3. Magnite, Inc. (NASDAQ:MGNI)
Stock Price as of May 25: $9.25
Stock Price as of November 17: $11.11
Number of Hedge Fund Holders: 28
Magnite, Inc. (NASDAQ:MGNI) is the world’s biggest independent sell-side advertisement platform (SSP). In the last 12 months, Magnite, Inc. (NASDAQ:MGNI) stock has fallen from $60 to $10 as investors are concerned about the future of growth companies.
The significant dip in Magnite, Inc. (NASDAQ:MGNI) stock price reflects that the impact of a potential recession has already been factored into the stock and in case of any positive catalyst, the stock price will shoot up. The company has made its position stronger as the main SSP through various acquisitions. Leading streaming giants like Netflix, Disney+, and Apple TV Plus are looking to launch an affordable advertisement-supported service for their customers and this will increase the total addressable market (TAM) for Magnite, Inc. (NASDAQ:MGNI). Furthermore, ad spending is expected to jump in the second half of 2022 due to the mid-term elections in the US.
Here’s what Alger said about Magnite, Inc. (NASDAQ:MGNI) in its Q2 2021 investor letter:
“Magnite provides an advertising supply side platform for publishers. The technology helps publishers such as network television stations or cable news providers automate the sale of digital advertising inventory across different formats and channels, like desktop, mobile, video, audio, connected TV and over-the-top TV. Publishers monetize their digital advertising inventory by using Magnite’s platform to access a global market of ad buyers, including advertising agencies that use supply side platforms. Magnite also helps sellers decrease costs and protect their brands and user experience. Magnite receives ad inventory from sellers and optimizes publishers’ revenue yields by processing the highest buyer bids. Currently, Magnite keeps approximately 10% of ad spend as revenue (i.e. take rate) and passes on the remainder of the ad spend to publishers. Magnite’s clients include many of the world’s leading publishers of websites and mobile applications and the company believes that its platform reaches approximately 1billion individuals globally.
Shares of Magnite underperformed in the second quarter due to the growth market selloff and slower-than-expected growth in connected TV during the first three months of this year. We believe the 32% growth in connected TV was below expectations and due to a one-time issue with one of the company’s publishing partners that ran out of advertising inventory. Management noted the issue has been fixed and the company saw strong reaccelerating growth in April. Additionally, we believe Magnite’s recent acquisition of video advertising company SpotX will significantly bolster the company’s positioning within connected TV, a high-growth area of the digital advertising market that is taking share from linear TV ad budgets.”
