Increasing losses over three years doesn't faze Magnite (NASDAQ:MGNI) investors as stock lifts 6.7% this past week

Investing in stocks inevitably means buying into some companies that perform poorly. But long term Magnite, Inc. (NASDAQ:MGNI) shareholders have had a particularly rough ride in the last three year. Unfortunately, they have held through a 66% decline in the share price in that time. On the other hand the share price has bounced 6.7% over the last week. The buoyant market could have helped drive the share price pop, since stocks are up 3.3% in the same period.

On a more encouraging note the company has added US$83m to its market cap in just the last 7 days, so let's see if we can determine what's driven the three-year loss for shareholders.

View 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. Shareholders of unprofitable companies usually desire strong revenue growth. That's because fast revenue growth can be easily extrapolated to forecast profits, often of considerable size.

In the last three years, Magnite saw its revenue grow by 28% per year, compound. That's well above most other pre-profit companies. The share price has moved in quite the opposite direction, down 18% over that time, a bad result. It seems likely that the market is worried about the continual losses. But a share price drop of that magnitude could well signal that the market is overly negative on the stock.

The graphic below depicts how earnings and revenue have changed over time (unveil the exact values by clicking on the image).

Take a more thorough look at Magnite's financial health with this free report on its balance sheet.

A Different Perspective

Magnite shareholders are up 7.3% for the year. Unfortunately this falls short of the market return. If we look back over five years, the returns are even better, coming in at 8% per year for five years. It's quite possible the business continues to execute with prowess, even as the share price gains are slowing. It's always interesting to track share price performance over the longer term. But to understand Magnite better, we need to consider many other factors. To that end, you should be aware of the 1 warning sign we've spotted with Magnite .

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.