https://www.youtube.com/watch?v=6MldSPQyYzk&feature=emb_…
MGNI popped to $32 after hours today supposedly based on a recommendation from Laura Martin of Needham. She makes in in the last 30 seconds of the clip in the attached link. She said it’s her #1 pick for 2021.
Seems like we were just talking about this stock when it was around $10…about 6 weeks ago…this market is nuts. This is still only a $3B market cap company. I could see this jumping a lot higher in the current market climate.
MGNI was also mentioned favorably by Beth Kindig in her interview with TMF.
Don
The interview with Beth Kindig can be watched on YouTube at the following link
This one or e.g. FuboTV raise 200, 300, 400% in a week or two and nobody bats an eye.
But if the likes of Zoom or Tesla rise like that over an entire year on tons of business revelations, all hell breaks loose and it’s all over the media and the “valuation is absurd”.
Now they are telling me that e.g. TDOC is still “richly valued” at 15x forward sales and to be cautious. What the hell, in this market that is absolutely nothing. I feel like an entire generation of young investors is growing up that is throwing traditional valuation metrics out of the window. How can we help it? It is one perceived missed opportunity after the next if one pays any attention to traditional valuation.
Okay, so FuboTV is “like buying Netflix 30 years ago” and Magnite is “like buying Trade Desk 10 years ago” (exaggeration).
I mean, even “Amazon traded at a 3000xPE once”.
I wasn’t at all excited about FuboTV, so I took no position and watched it from the sidelines go from 20$ to 50$. Still not excited about it at all. What they are doing doesn’t interest me, personally. So it doesn’t fit my portfolio.
For Magnite, I was mildly enthusiastic and took a tiny position < 1% from around 19$. Sure, they are/were really tiny and have a lot of room to grow, but is that a good enough argument? Where’s the visionary CEO ala Jeff Green behind this? Any market-leading tech? First-mover advantage? Moat? Is just being associated with programmatic advertising enough?
I don’t like how fast things are happening. I want to watch such companies for a couple quarters and grow an opinion/conviction worthy of my investment. But if one doesn’t jump in at breakneck speed, a lot of perceived opportunity seems lost.
long TDOC (> 15%), TTD (~5%), Magnite (< 1%)
I don’t like how fast things are happening. I want to watch such companies for a couple quarters and grow an opinion/conviction worthy of my investment. But if one doesn’t jump in at breakneck speed, a lot of perceived opportunity seems lost.
I agree. Markets are frothy now. Deciding in the 5 minutes it takes a small new company to double in this market is crazy. I prefer companies that have been researched and discussed for a while. To cover those little rocket stocks, I have about 10% in some ARK ETF’s. ARK folks have the time and depth of knowledge of their market areas to find the newer ones, so I invested a few percent of my portfolio with them. They have exceeded my expectations.
The merger between rubicon and telaria was a good move.
Rubicon has the SSP expertise, Telaria has the CTV expertise. Combined, making a pretty competent DSP!
Long MGNI 5%, price $21
This one or e.g. FuboTV raise 200, 300, 400% in a week or two and nobody bats an eye.
But if the likes of Zoom or Tesla rise like that over an entire year on tons of business revelations, all hell breaks loose and it’s all over the media and the “valuation is absurd”.
You’ve also got to consider where they started from. Just because one stock goes up a big % over a short time, doesn’t really say anything about whether it is currently over or under valued
Even after tripling over the past seven weeks, and even with another 15% rise potentially this morning, I still believe Magnite is very undervalued. I’ve felt that ZM has been overvalued most of this year, (and I still do).
MGNI has become my biggest holding today. I had bought in about 6% allocation in early November, which doubled later that month. After all of the companies I follow had reported earnings in early December, MGNI still looked like the best place for my money and I sold some existing holdings to add quite a bit more Magnite, despite the stock having doubled over the past few weeks. If it doesn’t pull back over the next week, it’s going to be quite a big percentage for me at the end of December (it was about 20% of my port at yesterday’s close and appears it’s going to spike up again this morning), but I can’t see myself selling any anytime soon. MGNI + TTD represent more than one-third of my port that are now programatic advertising focused, and they could pull back quite a bit at some point (tho so could any of my stocks), but long term, I think these are the right companies for me to be heavily invested in.
With the recent performance in December especially of MDB and MGNI, and to a lesser extent, DDOG, DOCU, GH, NTNX, CRWD, and SMAR in particular, my portfolio has grown tremendously since November 1st. At October 31, 2020, I was only up +50.1% as I didn’t own ZM this year :(. A month later, at November 30th, I was up +94.8%. And as of yesterday’s close I am up +158.4% YTD now! It’s the 23rd of December, and I think there have only been 2 trading days (maybe 3?) so far this month where my portfolio didn’t close at a new all time high. Just nuts. And that’s before my 20% MGNI holding looks like it may go up another 15% this morning when the market opens today. My portfolio has grown by more in the past 60 days than it was worth at the beginning of this year on January 1st, 2020! Just crazy to think about. I know this might feel like old hat for those of you that rode ZM to great heights this summer and are still beating my ytd performance pretty handily, but it really feels euphoric finishing the year like this, especially after missing out on the Zoom gains.
I tend to focus a bit more on valuation than some on this board, but when it comes to a company like Magnite, I do think putting aside the big percentage rise recently and looking at your future expectations for the company vs what it is selling for today will provide a different perspective. I’m only modeling +30% revenue growth each of the next two years for MGNI (which I think they will beat by a lot) and even with that assumption, the company and its stock, look really inexpensive to me right now.
-mekong
For Magnite, I was mildly enthusiastic and took a tiny position < 1% from around 19$. Sure, they are/were really tiny and have a lot of room to grow, but is that a good enough argument? Where’s the visionary CEO ala Jeff Green behind this? Any market-leading tech? First-mover advantage? Moat? Is just being associated with programmatic advertising enough?
Being the exclusive partner of DIS/HULU is a big driver. I remember VZ was the primary client of APPS and see what they have done. I got out of APPS in the single digits and that was a BIG mistake. Being liked by analysts like Beth and Laura Martin of Needham (whose top picks in 2019 was ROKU, 2020 was TTD and now MGNI in 2021) doesn’t hurt. MGNI’s 3Q revenues was up 62% yoy. Adj EBITDA was 3xs Needham’s estimate. eMarketer estimtaed CTV ad spending grew at 30% and MGNI grew 51%. CTV grew at TTD 100% who partners with MGNI who grew the same 100% from TTD.Their FCF was +8.4M in Q3, adj eps beat by .09 and was positive from estimates of a negative .03.
Rob
This seems like a lot of confidence for a company that most recently grew only 12% year over year.
I know the headline ran with 62% growth and some of the financial sites show that 62% as well. But from their own quarterly press release, that is not the actual growth rate.
Magnite revenue was $61.0 million for Q3 2020, up 62% from Q3 2019 on an as reported basis and up 12% on a pro-forma basis
Third quarter 2020 financial results of Magnite represent the combined performance of Rubicon Project and Telaria, which merged on April 1, 2020. Third quarter 2019 comparative numbers do not include results from Telaria, unless noted as pro-forma.
Telaria was around a $15M/quarter company. So the 62% doesn’t take into account nearly 25% of the combined company total revenue into the comparable. And when you look at the comparable it’s only 12% growth for the combined company.
Further the mobile and desktop grew about 3% YoY. And CTV accounted for $11M and 18% of revenue and grew at 51%. At $11M that should be growing near triple digits to be anywhere near matching the narrative. $11M and 51% are pathetically small numbers for what should be a hypergrowth market. And that CTV growth rate has fallen like a rock every quarter.
The guidance is similarly weak at $75M at top of guide. The Q4 combined comparable is $68.1M, implying 10-11% growth. Q4 is a seasonally larger quarter for both of the Magnite companies. As typical you can expect Q1 guide to show a decline QoQ. And probably continued 10-12% growth.
There are far better companies to invest in this space.
Darth
Long ROKU
I used to have MGNI at 5 and it traded sideways for a long time. Got out as felt opportunities for cash were better elsewhere but got back in at 19 and then again at 25. It has run up like crazy the last few days and while I like programmatic ads it seems like anything in the sector is just blowing upwards just because they have programmatic ads regardless of fundamentals. I took a small spec position in ACUIF a week ago at 10. It is now up over 50% in one week. I feel these will land hard at some point and will need heavy monitoring or good stop loss percentages for the speculative ones.
I plan to hold MGNI for a while but may sell ACUIF if it gets run up too much too soon
For those looking at alternatives if you feel that MGNI has run up too much and do not want to add at these levels , you can take a look at PUBM (IPO’d recently) and PERI.
This seems like a lot of confidence for a company that most recently grew only 12% year over year.
I know the headline ran with 62% growth and some of the financial sites show that 62% as well. But from their own quarterly press release, that is not the actual growth rate.
Magnite revenue was $61.0 million for Q3 2020, up 62% from Q3 2019 on an as reported basis and up 12% on a pro-forma basis
You’re absolutely correct that pro forma is the number to focus on. And yes it was only +12% last quarter, but keep in mind we’re talking about advertising during July-Sept of the 2020 pandemic.
Looking at trending data starting with Q2, when much advertising all but stopped as companies conserved cash at the outset of the pandemic:
TTD went from -13% revenue decline in Q2 to +32% in Q3, and have guided for +35% in Q4 (which they will probably significantly beat)
MGNI went from -24% pro forma rev decline in Q2 (the very first quarter of the merger of Telaria and Rubicon when they weren’t even starting to realize any benefits of the combination) to a +12% revenue growth in Q3, and it will certainly be much higher in Q4.
And all of this considering that the shift from traditional to programatic advertising was greatly accelerated during the pandemic, such that when total advertising spend even gets close to where it was pre-pandemic again, it’s going to magnify the impact on companies like Magnite and The Trade Desk.
-mekong
I took a position after reading mekong’s breakdown last month and averaged my price at $11.73. I have added to my advertising positions like PINS because Q4 is usually the largest quarter for advertising revenue due to the holidays. When factoring in the amount of companies getting the word out that they are now doing online shopping I see Q4 numbers being much higher. MGNI went from a 5% position to now 11% and my #2 holding. I plan on holding until at least after Q4 numbers come out and then possibly trimming to move more to my cyber securities.
Is the MGNI recent COMPANY performance (and forecast) inadequate to support the share price?
Perhaps, but I don’t think so. I will wait and see what unfolds. If it does well, I’ll hold. If it disappoints, I’ll do what I usually do in that case… take it out back and shoot it.
And, if it disappoints, the share price will drop before I can shoot it. A problem? Nah. I have a 5-bagger on my investment already. If it drops to being a 3-bagger, that’s hardly a tragedy. If necessary, sell and move on.
It’s not like there are no other excellent investment opportunities. I could add to some of my existing companies that are up tremendously. Or I could add to a new company (or two) that have also gone up tremendously… because it’s already gone up a bunch is irrelevant. The FUTURE is what is relevant and… AGAINST what the financial experts say… past performance IS FREQUENTLY a guide to future performance, so don’t be afraid to add to winners. 
Rob
Rule Breaker Home Fool & STMP/MTH Maintenance Coverage Fool
He is no fool who gives what he cannot keep to gain what he cannot lose.
Annual Revenues from the past few years:
2016: 278M
2017:155M -44% YoY
2018:124M -20% YoY
2019: 156M +26% YoY
Yes, the recent sequential growth accelerated but I consider this a turn around stock and won’t touch it.
Annual Revenues from the past few years:
2016: 278M
2017:155M -44% YoY
2018:124M -20% YoY
2019: 156M +26% YoY
This is clearly a “hope for a turnaround” company and not a high growth company, and it doesn’t belong on our board, even if you happen to love it. Further posts will be deleted
Best,
Saul