Actions of Magnite (NASDAQ: MGNI), the world’s largest independent advertising platform, recently soared. The stock jumped 10.4% on Wednesday and is up about 7% as of 1:45 p.m. EST. Shares have risen 57% over the past week.
This follows third-quarter results earlier this month that crushed Wall Street estimates, a handful of analyst upgrades for the stock and bullish management comments in recent investor presentations. And now, the stock’s huge valuation gap over its demand-side ad platform counterpart. The trade office (NASDAQ: TTD) seems to be shrinking.
Magnite’s business was hit hard by a sudden slowdown in ad spending earlier this year when the economy came to a screeching halt. But he is recovering faster than expected.
the technology company reported third-quarter revenue of $ 61.0 million, ahead of an average analyst estimate of $ 53.5 million. Adjusted earnings per share was $ 0.06, beating consensus expectations for a loss per share of $ 0.04. Although total revenues grew only 12% year-over-year in the third quarter, Connected Television (CTV) revenues grew 51% during the period. In addition, management expects stronger growth from CTV in the fourth quarter.
Even after the title’s rise, there is a gulf between the valuation of Magnite and that of The Trade Desk. The latter operates on the other side of the data-driven ad technology business – the side that buys ads (not sells them). Magnite shares are currently selling at 8 times analysts’ average estimate for next year’s sales, and The Trade Desk is trading at 38 times 2021 sales estimates.
In recent investor meetings with RBC Capital and Stephens, Magnite executives discussed how more power seems to be shifting to publishers, with browser cookies coming under scrutiny. These browser cookies were largely a tool for ad buyers; In a world without cookies, sell-side platforms become more important as they are agents for publishers – and publishers have privileged access to their own data.
In addition, Magnite management has reported that it still plans to eventually return to the growth rates of over 20% that it offered to investors before the pandemic.
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