Why is Magnite stock down today?

Actions of tycoon (MGNI -10.76%)sell side adtech platform, have pulled back on reports that Walt Disney may stop using Magnite for Disney Real-Time Ad Exchange, or DRAX, with some demand-side platforms (DSPs).

As a result, shares fell 10.8% on the news.

Image source: Getty Images.

Is Magnite having problems?

At the Digiday Publishing Summit, Jamie Power, Disney’s senior vice president of addressable sales, said in a presentation that Disney is no longer using Magnite with two application platforms. Alphabet and Trade office.

The news seemed to indicate a setback for Magnite, as ditching Disney in those relationships is clearly a business loss.

However, several Wall Street analysts dismissed the market’s response, saying it was old news and that the sell-off created a buying opportunity.

Benchmark, for example, said the story originally broke in March, essentially saying it was already priced in. Analyst Daniel Kurnos also argued that it is “highly unlikely” that Disney will build a complete end-to-end stack without Magnite.

Craig-Hallum and Needham also said the sale creates a buying opportunity for Magnite.

What it means for Magnite

An 11% drop might seem excessive given that the news seems partly speculative at this point and the implications are not fully understood.

Like other adtech stocks, Magnite struggled after the pandemic as the previous digital advertising boom gave way to slower growth and less enthusiasm among investors.

Magnite is still struggling to accelerate its growth, as revenue rose just 7% in the second quarter. With or without Disney’s setback, the company will need to improve on that number for the stock to be a winner.