MGNI - Magnite: Netflix Opportunity Highlights Undervaluation

2024-05-20 09:00:58 ET

Summary

• Magnite's share price bounced significantly on news of a partnership with Netflix.
• The deal could be a significant driver of incremental free cash flow but doesn't really alter the uncertainty about the positioning of SSPs in the adtech value chain.
• Magnite's financial performance is improving though, supported by a stronger digital advertising market.
• Stronger growth and buybacks should support MGNI stock but there may not be much more room for multiple expansion.

Magnite's ( MGNI ) share price was up significantly Thursday on the back of news that Netflix ( NFLX ) would be launching its own ad platform, with Magnite as a partner. This could be a significant source of additional revenue in time, with a large impact on the company's bottom line. I don't think this really changes Magnite's prospects though. The company has looked deeply undervalued for some time based on the company's ability to generate free cash flow, but an uncertain macro environment and an evolving adtech landscape have prevented the stock from moving higher....

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