Magnite: The Other End of the Pipe
Magnite: The Other End of the PipeThe largest independent sell-side platform just posted its best year as a public company. The stock fell almost in half. Here is what is actually going on.
In the last piece I wrote about The Trade Desk, I noted almost in passing that while the largest independent demand-side platform grew revenue 12% in the first quarter of 2026, the largest independent supply-side platform grew its connected television business 30% in the same quarter. I said the share difference had to be going somewhere. Several of you wrote back asking the obvious follow-up question. If The Trade Desk is leaking share, who is catching it, and is that company investable. The company is Magnite $MGNI . And the answer is more complicated than “buy the other side of the trade,” because the thing catching the share has problems of its own, sits in a worse structural position than The Trade Desk ever did, and carries a lottery ticket stapled to it that could be worth more than the entire rest of the business. Here is the setup that got my attention. In fiscal 2025 Magnite generated $714 million of revenue, $670 million of what it calls Contribution ex-TAC, and $232 million of adjusted EBITDA at a 34.7% margin. Every one of those was a record. The company turned GAAP-profitable for the second straight year, repaid its convertible notes, authorized a buyback, and watched its highest-margin, fastest-growing business cross 50% of the company for the first time. By almost any operating measure, 2025 was the best year in the company’s history. The stock went from roughly $26 last August to roughly $14 today. The market cap is about $2 billion. The business got better and the stock got cheaper, and that gap is the entire reason this name is worth a week of reading. I have spent that week with the FY2025 10-K filed in February 2026, the Q1 2026 release from early May, the last several years of annual reports and earnings transcripts back through the 2022 advertising recession, the trade coverage from AdExchanger and Digiday and PPC Land, and the public record of the Google antitrust case that hangs over the whole thing. What follows is my attempt to figure out whether the disconnect is an opportunity or a warning... Continue reading this post for free in the Substack app
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