Magnite Inc. (MGNI) was originally founded as Rubicon Project in 2007 by four people (Duc Chau, Frank Addante, Julie Mattern, and Craig Roah) who had previously worked at the online advertising company L90. The company quickly attracted funding, raising $42 million before the end of 2009.
Rubicon Project transformed into Magnite after a 2020 merger with the video management company Telaria. After the merger, Magnite could boast its reputation as the largest omnichannel sell-side platform.
While still operating as Rubicon Project, the company had an IPO in 2014. Shares sold for a little more than $20. In recent years, Magnite share price has experienced a few wild swings, which makes many investors wonder how high can Magnite stock go.
What Is The Highest Magnite Stock Has Ever Been?
Magnite stock price reached its highest peak in February of 2021. On February 12, MGNI share price nearly hit $62 per share. The high price was the culmination of a rapid increase in price over a short time frame.
During October of 2020, the price never reached $10. During December, however, the price started to rise. It broke $30 on the last day of 2020, and kept moving up until February 12 (with a couple of small setbacks along the way).
Unfortunately, Magnite’s elevated stock price didn’t last very long.
By March 5, 2021, the price had fallen below $40 per share. It quickly rebounded to a little more than $50 per share near the end of March. By the middle of May, shares were selling for less than $25 per share. In mid-July, investors could pick up shares for about $30 to $35 each.
Magnite’s Financials show that the company did much better in 2020 than it had done over the last few years, which explains the rapidly increasing stock price near the end of the year.
In 2017, the company had total revenues of $155.54 million and a gross profit of $98.70 million.
2018 was not a great year for Magnite. It had a total revenue of $124.68 million and a gross profit of $64.68 million.
Magnite’s prospects looked promising in 2019, when it ended the year with $156.41 million in total revenue and $99.02 million in gross profit
2020 looked much better. The company’s records show that it increased its total revenue to $221.62 million and its gross profit to $143.88 million.
Magnite Analyst Price Targets
From mid-June to mid-July, most analysts gave Magnite Buy ratings. A few issued hold ratings, suggesting that investors should keep their shares but not purchase more. No major analyst group has reported Sell or Strong Buy ratings.
The consensus price target has hovered around $40 per share, which is considerably higher than half a year ago when the price target was about $20.50 per share.
How High Can Magnite Stock Go?
The merger between Magnite and Telaria created a lot of excitement in 2020. That excitement pushed stock prices up. At the moment, much of the enthusiasm around the merger has cooled.
Some analysts say that the stock could climb to above $70 within a year. It seems more likely that the price will settle somewhere within the $50 range.
A valuation analysis conducted using a discounted cash flow forecast analysis place the intrinsic value at $50.71 per share.
Magnite Stock Risks
Some analysts – mostly short-sellers – believe that Magnite has a high chance of tumbling lower at some point in 2020. They made this call in January. Few would describe the activity so far as a “crash.” It’s still 500 percent higher than it was in June of 2020. Yes, the recent losses are concerning, but they do not rise to the level of a crash.
Why do some analysts believe the price will crumble, perhaps returning to its pre-rally value? They claim that the company has a high valuation that doesn’t match reality. Some reports also point to growing pains within the company as Magnite and Telaria try to merge their technologies and staff members.
A handful of investors have presented concerns that border on conspiracy theories. For instance, some say that the CFO has a suspect track record and may even have committed financial crimes to make the company look more successful than it is.
It’s much more realistic to assume Magnite’s share price has fallen as a result of claims made by Spruce Point Capital Management, which declared it believes investors are being misled by growth projections. Whether its accusations are accurate, however, has not been determined.
Is Magnite Stock Undervalued?
Even after the dip, share prices are much higher than they were a year ago. Skeptics claim that Magnite might have room to grow, but it seems unlikely that the stock price will move upward in a significant way until it shows some evidence of realizing growth estimates and provides evidence that counters accusations.
Bears claims that It could fall to last year’s low, but that looks unlikely unless the company faces serious actions from regulatory agencies.
In favor of the bulls is a discounted cash flow analysis that posits the fair value is around $50 per share. From current levels, that would suggest an upside of around 60%. Keep in mind that price volatility for MGNI share price so if it manages to climb higher it won’t be in a straight line if history is anything to go by.
The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.