On the one hand, investing in companies that have just become public can be a great way to see a strong return, as this is often the moment the company’s stock is the cheapest. On the other hand, there are fewer data points to review and it’s tough to make an educated decision about how that stock is going to fare in the future. Companies like Gaia are likely stocks your parents aren’t familiar with. These online companies just entered the market via an initial public offering (IPO). So how are their stocks moving since they went public- and what is the potential for future gains? Let’s review TipRanks to see what the analysts have to say...
Gaia Inc (GAIA) - Research Report
Gaia has been described as “Netflix for Insane People” by a popular YouTuber. The company offers “the largest resource of consciousness expanding videos” and targets the yoga community. Videos you might find on this subscriber-based site range from documentaries and short films to feature movies. Genres span from research findings of Antarctica to the “Science and Spirit of our Connection.” The company went public on March 22 at $15 a share. Today the stock costs $9.62. Analysts have high hopes it will double from here. Three currently cover the stock and two reiterated buy ratings April 30, following the company’s first earnings release for the first quarter.
Streaming revenue was in line with Roth Capital’s expectations. The research firm’s highly rated analyst, Darren Aftahi reiterated a buy rating with a price target of $15.50 and suggests he believes in the company’s future: “1Q streaming revenue was in-line (~36% y/y growth) with ~34% sub growth y/y (slightly better), while lower subscriber costs and opx led to narrowing losses, which should set the table for GAIA to reach EBITDA profitability later this year. We believe the story still remains a balance between topline growth expectations and cash burn, but are encouraged by progress made, and thus believe shares can rally from here.”
Aftahi attributes the revenue growth to organic adds via referral programs and predicts the company will expand more than three times over by September. Though it is tough to tell the growth trajectory, Aftahi believes shares have bottomed out at $9, leaving room for value.
As far as the rest of the Street – Gaia is considered a “Strong Buy” on TipRanks, with three buy ratings from analysts and a consensus price target of $19.17, which shows a near 98% upside. Gaia also has a Smart Score of 8 out of 10. The Smart Score includes 8 different types of research including analyst ratings, blogger opinion, insider activity, news sentiment and other metrics.
Zoom Video Communications Inc. (ZM) - Research Report
“Let’s get on a Zoom call” might be something you’ve heard in your office lately. The online video-conference call company completed its initial public offering just over a week ago on April 18t with a share price of $36, but on its first day on the market, shares closed at $62 a piece. It’s so new that only one analyst has initiated coverage and it was just Tuesday, April 30. Highly rated Rosenblatt Securities analyst, Ryan Koontz rated the stock hold and offered a $60 price target, which shows a near 12% downside from where the stock currently stands. Despite the neutral rating, Koontz shared encouraging sentiment regarding the video conferencing space.
“ZM has demonstrated through its impressive revenue growth to date that employee communications behaviors are shifting to video. ZM believes this shift is accelerating as video communications gain critical mass inside organizations and business dealings. As a fast-emerging leader in the growing Video Conferencing market and new challenger in the unified communications market, we believe ZM is poised to sustain strong revenue growth due to its industry leading technology and proven go-to-market approach,” Koontz said.
“Further, we believe ZM products’ viral expansion record within organizations has the potential to sustain high growth with radically reduced cost-of-sales, resulting in higher profitability than most comparable SaaS and UCaaS peer companies. Clearly, sustaining an operating profit and over 100% y/y revenue growth over its past seven quarters, growing from $26M/qtr to $105M/qtr supports this view.”
Moreover, Koontz foresees the video conferencing to be worth around $10 billion per year with an active shift to subscription-based purchasing and suggests the business’ metrics in video support and customer-base support the idea it is moving from a Mid-Market to a “massive enterprise market.”
Lyft (LYFT) - Research Report
Ok, maybe your parents know this one. Perhaps they’ve even used a Lyft to get around in an unfamiliar city on a business trip. The ride-sharing company made its initial public offering on March 28 at $72 and since then, 20 analysts have been hot on its tail. Ahead of the company’s first earnings report -- to come out May 7, Tigress Financial's 5-star analyst Ivan Feinseth initiates coverage of Lyft with a buy rating. The analyst says Lyft continues to both pioneer and benefit from the growing transportation-as-a-service industry. Additionally, Feinseth foresees a major business opportunity for the company in the healthcare transportation services sector, which is experiencing an increase in demand.
“LYFT has a significant growth trajectory which is driven by both ongoing adoption of TaaS, along with the fact that many consumers are foregoing auto purchases and relying on companies like LYFT as their key provider of transportation. Consumers are also using ride-on-demand services and renting cars less when they travel. In 2018, LYFT’s labor force of almost two million drivers provided services to over 30 million riders, facilitating over 619 million rides, up 65% Y/Y. LYFT’s growing service presence and driver base well positions it for accelerating growth,” Feinseth said.
Lyft is considered a “Moderate Buy” on TipRanks. Out of 20 analysts, 13 are buys, 6 holds and 1 sell. With a consensus price target of $74.06, there’s a potential upside of just under 24%. Lyft’s Smart Score of 7 suggests this stock is neutral. The metric accounts for positive insider activity, analyst ratings, blogger opinion but very bearish news sentiment.
Pinterest (PINS) - Research Report
This is the latest company to IPO, having gone on the market April 18 with an initial offering of $19 a share. Pinterest is considered an online scrapbook. It’s a place where people can share threads of ideas with one another – including recipes, life hacks (ways to accomplish tasks easier) and other pieces of knowledge people find valuable – all in picture form. The idea is to pin things to your personal Pinterest board so you can come back and check them out later (hence the ticker name.)
The company so far has just two analysts covering its stock. One London-based equity firm called Atlantic Equities picked up coverage of the U.S. stock before it even went public. James Cordwell offered an overweight rating and $23 price target.
“We believe the company’s unique and broadly appealing proposition, offering consumers the ability to view and collate visual recommendations, will enable ongoing robust user growth,” Cordwell said.
Though the sentiment is bullish, Cordwell is wary. He notes other social media platforms like Twitter and Facebook are more popular, though they are not directly linked to shopping intent the way Pinterest users are. This, he believes, can add value to the brand in terms of ad growth.
Pinterest is considered a “Moderate Buy” on Wall Street, with one buy and one hold rating from analysts. The consensus price target of $19.75 shows a downside, since the stock is currently trading for $32.31.
Enjoy the Research Reports on the Stocks in this Article: