Shareholders in Magnite (NASDAQ:MGNI) have lost 75%, as stock drops 3.7% this past week
It is a pleasure to report that the Magnite, Inc. (NASDAQ:MGNI) is up 36% in the last quarter. But only the myopic could ignore the astounding decline over three years. To wit, the share price sky-dived 75% in that time. Arguably, the recent bounce is to be expected after such a bad drop. Only time will tell if the company can sustain the turnaround.
With the stock having lost 3.7% in the past week, it's worth taking a look at business performance and seeing if there's any red flags.
Check out our latest analysis for Magnite
Because Magnite made a loss in the last twelve months, we think the market is probably more focussed on revenue and revenue growth, at least for now. When a company doesn't make profits, we'd generally expect to see good revenue growth. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.
In the last three years, Magnite saw its revenue grow by 28% per year, compound. That is faster than most pre-profit companies. So on the face of it we're really surprised to see the share price down 21% a year in the same time period. The share price makes us wonder if there is an issue with profitability. Ultimately, revenue growth doesn't amount to much if the business can't scale well. If the company is low on cash, it may have to raise capital soon.
You can see below how earnings and revenue have changed over time (discover the exact values by clicking on the image).
This free interactive report on Magnite's balance sheet strength is a great place to start, if you want to investigate the stock further.
A Different Perspective
Magnite provided a TSR of 32% over the year. That's fairly close to the broader market return. That gain looks pretty satisfying, and it is even better than the five-year TSR of 11% per year. It is possible that management foresight will bring growth well into the future, even if the share price slows down. While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. Take risks, for example - Magnite has 1 warning sign we think you should be aware of.
We will like Magnite better if we see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on American exchanges.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.
