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Magnite, Inc.'s (NASDAQ:MGNI) Path To Profitability

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·3 min read
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We feel now is a pretty good time to analyse Magnite, Inc.'s (NASDAQ:MGNI) business as it appears the company may be on the cusp of a considerable accomplishment. Magnite, Inc. operates an independent sell-side advertising platform in the United States and internationally. With the latest financial year loss of US$25m and a trailing-twelve-month loss of US$58m, the US$6.7b market-cap company amplified its loss by moving further away from its breakeven target. The most pressing concern for investors is Magnite's path to profitability – when will it breakeven? Below we will provide a high-level summary of the industry analysts’ expectations for the company.

Check out our latest analysis for Magnite

According to the 6 industry analysts covering Magnite, the consensus is that breakeven is near. They expect the company to post a final loss in 2022, before turning a profit of US$25m in 2023. So, the company is predicted to breakeven approximately 2 years from today. What rate will the company have to grow year-on-year in order to breakeven on this date? Using a line of best fit, we calculated an average annual growth rate of 66%, which signals high confidence from analysts. Should the business grow at a slower rate, it will become profitable at a later date than expected.

earnings-per-share-growth
earnings-per-share-growth

Given this is a high-level overview, we won’t go into details of Magnite's upcoming projects, though, take into account that typically a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.

One thing we’d like to point out is that Magnite has no debt on its balance sheet, which is quite unusual for a cash-burning growth company, which usually has a high level of debt relative to its equity. This means that the company has been operating purely on its equity investment and has no debt burden. This aspect reduces the risk around investing in the loss-making company.

Next Steps:

This article is not intended to be a comprehensive analysis on Magnite, so if you are interested in understanding the company at a deeper level, take a look at Magnite's company page on Simply Wall St. We've also put together a list of essential aspects you should look at:

  1. Valuation: What is Magnite worth today? Has the future growth potential already been factored into the price? The intrinsic value infographic in our free research report helps visualize whether Magnite is currently mispriced by the market.

  2. Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Magnite’s board and the CEO’s background.

  3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.

This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.