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Here it is. Magnite $MGNI deep dive.
The steps in this thread are noted in a tweet of mine
Step 1.
My thoughts before starting this were that they were $TTD of the supply side of online advertising. I heard this everywhere on FinTwit and it honestly got me really excited
The steps in this thread are noted in a tweet of mine
Step 1.
My thoughts before starting this were that they were $TTD of the supply side of online advertising. I heard this everywhere on FinTwit and it honestly got me really excited
Step 2:
The primary moat that the company made clear to me was mobile advertising. Apparently, they have only dipped a toe into mobile ads and if they can get big market share they could succeed.
The primary moat that the company made clear to me was mobile advertising. Apparently, they have only dipped a toe into mobile ads and if they can get big market share they could succeed.
Step 3.
As I browsed the website, I got very confused. Their website is small and not very informative. If I had not known they worked in advertising, I would not have learned that from their website. It looked new and innovative but seemed like a website that I could have made
As I browsed the website, I got very confused. Their website is small and not very informative. If I had not known they worked in advertising, I would not have learned that from their website. It looked new and innovative but seemed like a website that I could have made
Step 3 cont.
For the record, I cannot make websites. I really searched hard for just a paragraph saying what they do, but the only thing I could find was analogies about what they do and I could not find a literal translation of what they do! That's crazy imo.
For the record, I cannot make websites. I really searched hard for just a paragraph saying what they do, but the only thing I could find was analogies about what they do and I could not find a literal translation of what they do! That's crazy imo.
Step 5.
(I skip step 4 when I do deep dives)
@chitchatmoney had a great podcast about $MGNI that explained their problems with growth really well. Chit Chat Moneys podcasts are always solid and a good balancer for me. They are normally more bearish than I (A strong bull).
(I skip step 4 when I do deep dives)
@chitchatmoney had a great podcast about $MGNI that explained their problems with growth really well. Chit Chat Moneys podcasts are always solid and a good balancer for me. They are normally more bearish than I (A strong bull).
Step 6.
I watched an interview with $MGNI CEO Michael Barrett. I learned lots about their leadership and the bull thesis for Magnite. In theory, their bull thesis is very interesting and compelling. I did learn, however, that their leadership team has no founders. Bad thing imo.
I watched an interview with $MGNI CEO Michael Barrett. I learned lots about their leadership and the bull thesis for Magnite. In theory, their bull thesis is very interesting and compelling. I did learn, however, that their leadership team has no founders. Bad thing imo.
Step 7.
Cash/LTD Ratio= Very good. resonably low LTD.
Gross Margins= 63% which is okay, I try to look for at least 70%.
Aquisitions= Magnite is a combination of 2 small companies. They are only the biggest supply side advertising company because of the merger into $MGNI...
Cash/LTD Ratio= Very good. resonably low LTD.
Gross Margins= 63% which is okay, I try to look for at least 70%.
Aquisitions= Magnite is a combination of 2 small companies. They are only the biggest supply side advertising company because of the merger into $MGNI...
Step 7 cont.
FCF Margin= -11%
I really don't like to see that they are burning money at a rate like this. It has stayed in the negatives the past 5 years (small exception where it hit 0)
With the bull thesis of huge growth, their FCF Margin needs to be at least increasing
FCF Margin= -11%
I really don't like to see that they are burning money at a rate like this. It has stayed in the negatives the past 5 years (small exception where it hit 0)
With the bull thesis of huge growth, their FCF Margin needs to be at least increasing
Step 8.
The earnings calls had little to show for them. Last quarter and a year ago they almost said the same thing about beginning to grow and growth being tremendous with the increasing TAM. I would be interested if they said different things but they really just repeated.
The earnings calls had little to show for them. Last quarter and a year ago they almost said the same thing about beginning to grow and growth being tremendous with the increasing TAM. I would be interested if they said different things but they really just repeated.
Step 9.
Magnite didn't do so hot on the Checklist: 8.5 points.
Link is below, but basically anything under 15 I am ignoring
Lost lots of points with no real advantages to any other competitor, high customer concentration, and poor leadership ownership
https://docs.google.com/spreadsheets/d/1_WA2Mp38AkfewIfohy2Y8jAxzrZul3CUArB-cwKyZz8/edit#gid=0
Magnite didn't do so hot on the Checklist: 8.5 points.
Link is below, but basically anything under 15 I am ignoring
Lost lots of points with no real advantages to any other competitor, high customer concentration, and poor leadership ownership
https://docs.google.com/spreadsheets/d/1_WA2Mp38AkfewIfohy2Y8jAxzrZul3CUArB-cwKyZz8/edit#gid=0
Step 10.
The Bull Thesis for $MGNI imo:
Just as $TTD grew rapidly for the demand side, Magnite has based their company as the Supply-side of ad., and if they can make a big step into mobile ads, they could take market share there is a spot where there is little competition
The Bull Thesis for $MGNI imo:
Just as $TTD grew rapidly for the demand side, Magnite has based their company as the Supply-side of ad., and if they can make a big step into mobile ads, they could take market share there is a spot where there is little competition
Step 11.
The Bear thesis for $MGNI imo:
They continue to say that the growth is coming and coming, but the only major growth this company has had was in their valuation. I just haven't seen enough growth that leadership has been promising and with that, I start to lose trust.
The Bear thesis for $MGNI imo:
They continue to say that the growth is coming and coming, but the only major growth this company has had was in their valuation. I just haven't seen enough growth that leadership has been promising and with that, I start to lose trust.
Step 11.
I need to add that $MGNI competes with HUGE companies like $AMZN and $GOOG when it comes to advertising. These companies are big enough to do their own advertising on their own sites and do not need to use $MGNI and they can do it for cheaper
This poses a big threat
I need to add that $MGNI competes with HUGE companies like $AMZN and $GOOG when it comes to advertising. These companies are big enough to do their own advertising on their own sites and do not need to use $MGNI and they can do it for cheaper
This poses a big threat
My Thoughts:
I'm going to stay away from this. The bull thesis is very promising but I cannot see a way it will happen. This company has promised strong growth soon for the past year (at least) and there are very few signs that it is coming.
I'm going to stay away from this. The bull thesis is very promising but I cannot see a way it will happen. This company has promised strong growth soon for the past year (at least) and there are very few signs that it is coming.
My thoughts cont.
The financials are not great. Gross and FCF Margins are barely investable and the leadership is nothing to write home about either.
For such a small company, $1,000,000 compensation for company execs. is absurd and the fact that none are founders is worrisome
The financials are not great. Gross and FCF Margins are barely investable and the leadership is nothing to write home about either.
For such a small company, $1,000,000 compensation for company execs. is absurd and the fact that none are founders is worrisome
My thoughts cont.
So, all in all, I wouldn't touch this. It is an interesting business, but the business itself is not good enough to join my portfolio.
So, all in all, I wouldn't touch this. It is an interesting business, but the business itself is not good enough to join my portfolio.