Ad-tech firm Magnite climbs after deal renewed with Disney

Today, Thursday, October 24, quotes on Magnite, an online advertising company, have advanced after it announced a two-year extension and expansion of its contract with Disney. In particular, the renewed agreement allows Disney to monetize college football games on live streams by leveraging Magnite’s technology.

Details

Magnite shares are up about 1.5% to $12.70 per share in premarket trading in New York today as of this writing. Yesterday, the stock shot up 8.50% at the open, as reported by Seeking Alpha, but ended up closing with a more modest 3.65% gain. Magnite has gained almost 34% since the start of the year and more than 92% over the last 12 months.

Yesterday’s gains came after Magnite announced that it had expanded and extended its deal with the Walt Disney Company for another two years. Under the new terms, Disney will be able to advertise in ESPN and ABC News podcasts and monetize college football games on live streams, among other things. These games air in prime time, while Disney’s contract with the College Football Playoff, which organizes a tournament at the end of the season, is valued at an average of $1.3 billion for 11 matches, as reported by Forbes. To put this into perspective, a single NFL game, on average, costs broadcasters $40–45 million.

About Magnite

Magnite develops various tools for traffic monetization. One of them, for example, helps advertisers to discover untapped audiences, determine optimal ad frequency, and cancel or pause deals in real time. The Motley Fool calls Magnite a leader in video and internet-connected TV (CTV) advertising. In addition to Disney, its clients include Fox and Warner Bros. Discovery.

Stock performance

In August, the Motley Fool recommended Magnite as one of its top three stocks to gain exposure to potential small-cap outperformance. Even though the company’s growth has slowed amid weakness in the streaming sector, it still has great potential, the Motley Fool argued. In the second quarter of 2024, Magnite posted $162.9 million in revenue, up 7% year over year, which translated into a net loss of $1.1 million. For the fiscal-2024 full year, the company expects its net income and earnings per share to be positive on a GAAP basis.

According to MarketWatch, all 11 analysts covering Magnite recommend buying the stock. The average target price is $17.50 per share, indicating 40% upside versus the last closing price.