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A Cloak of Displacement projects an illusion, making it appear as if you are standing in a different place near your actual location. The magic missile spell never misses, but in this case it will be targeting an illusion that is not actually there.

Would a Cloak of Displacement prevent magic missile from being able to auto-hit?

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Mechanically speaking, the Cloak of Displacement only gives a creature disadvantage on attack rolls against you. It makes it harder to hit you - in the case of things that require attack rolls - but it doesn't make you any harder to see or any less of a target.

Since Magic Missile doesn't require an attack roll be made against you and targets a creature that can be seen, the cloak has no effect on them and the missiles still hit.

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No

Magic Missile says:

You create three glowing darts of magical force. Each dart hits a creature of your choice that you can see within range.

The Cloak of Displacement says:

While you wear this cloak, it projects an Illusion that makes you appear to be standing in a place near your actual location, causing any creature to have disadvantage on Attack rolls against you.

Magic Missile lets you target creatures you can see. The Cloak of Displacement does not prevent you from being seen -- it just presents you in a different way. So Magic Missile can target someone with a Cloak of Displacement.

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