Shares of Magnite (MGNI -0.16%) charged sharply higher Thursday morning, surging as much as 31.4%. As of 11:53 a.m. ET, the stock was still up 30.5%.
The catalyst that sent the adtech specialist soaring was a new big-name ad partner.
Millions of new ad watchers
At the ad industry upfronts -- the annual advertising sales event for television and streaming platforms -- Netflix (NFLX -0.93%) dropped several nuggets that made waves. First, the company revealed that its less expensive ad-supported tier has quickly grown to 40 million global accounts just 18 months after its debut. Even more surprising, the tally is up from 23 million in January.
Perhaps more importantly to Magnite, Netflix said it planned to unveil its own advertising platform and will no longer rely on Microsoft's technology. As part of that move, Netflix announced that beginning this summer, the company will make its ad supply available to several programmatic ad partners, including Magnite and The Trade Desk, fully launching its platform in the U.S. by the second quarter of 2025.
A sizable opportunity
Several analysts have already weighed in on the deal. Benchmark notes that "Netflix could become Magnite's largest customer by the end of 2025." The firm reiterated its buy rating and $18 price target, which represents potential upside of 84% compared to Wednesday's closing price. It also called Magnite a "best idea" for 2024.
Investment firm Craig-Hallum is even more bullish, maintaining its buy rating and boosting its price target to $20. This represents potential gains for investors of 104% compared to Wednesday's close. The analysts cited Magnite's exclusive partnership with Disney, noting that the Netflix deal represents another huge vote of confidence.
Heading into the announcement, despite a rebound in the advertising market, Magnite shares were actually down 8% over the past year. A combination of slow revenue growth and lack of profits have weighed on the stock, but Wall Street and investors alike are viewing this announcement as a turning point for Magnite.
