Needham notes that Magnite’s (MGNI) share price is under pressure on Tuesday on press reports that Disney’s (DIS) Real-Time Ad Exchange, or DRAX, is no longer using Magnite. The firm believes that the negative market reaction is overdone and says it would be a buyer on weakness as DRAX is a small part of Disney’s CTV ad units; DRAX has only disintermediated Magnite from two DSPs, Alphabet (GOOGL) and Trade Desk (TTD); and as Needham does not expect Netflix (NFLX) or Roku (ROKU) to follow DRAX, over the next 2 years. The firm has a Buy rating on Magnite shares with a price target of $15.
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