No one could ignore Magnite's price drop during evening trading session, as the stock fell to $14.84, logging a -2.0% underperformance of the S&P 500. The stock is still trading within range of its average target price of $15.59, which may prove to be a resistance point to further declines. Analysts have given the Advertising stock target prices ranging from 11.0 to 20.0 dollars per share, with an average rating of buy.
For the greater market's outlook on the stock, we can use Magnite's short interest as a proxy. The short interest represents the proportion of the float's shares that are tied to short positions, meaning that the investor believes the stock will decline in the future. Here, the stock's short interest is 6.2% which means the outlook is split.
Short selling involves borrowing shares and then selling them at current market prices. In the successful version of the strategy, the shares are purchased at a lower price at some time in the future. The investor then returns the shares to the lender, and keeps the profit made on the sell/buy transaction.
One way to get an idea of the market sentiment on a stock is to check its rate of institutional ownership. In the case of Magnite, institutional investors own 71.6% of the shares, which indicates they have a very high stake in the company. What does this really tell us?
Institutional investors such as hedge funds, investment firms, and wealth managers devote significant resources to identifying good investments. If they have decided to invest in MGNI, it probably means they believe it is a solid investment choice.
But it could also mean they are buying up shares in an effort to acquire the company or to get seats on the board of directors. Also bear in mind that institutions are fallible (just maybe not quite as fallible as the average retail investor), so they may simply be wrong when they think they've found a good stock.
Overall, there is positive market sentiment towards Magnite because of an analyst consensus of some upside potential, a buy rating, an average amount of shares sold short, and an average number of institutional investors. Investors should not base their decisions on market sentiment only, they should also be aware of a stock's fundamentals before committing.
At a glance, here are some essential statistics you may want to know about MGNI:
It has trailing 12 month earnings per share (EPS) of $-1.32 per share
Magnite has a trailing 12 month Price to Earnings (P/E) ratio of -11.2 while the S&P 500 average is 15.97
The company has a Price to Book (P/B) ratio of 2.85 in contrast to the S&P 500's average ratio of 2.95
Magnite is a Consumer Discretionary company, and the sector average P/E and P/B ratios are 22.33 and 3.12 respectively