|Bid||0.00 x 800|
|Ask||0.00 x 1400|
|Day's Range||65.18 - 74.66|
|52 Week Range||10.54 - 82.47|
|Beta (5Y Monthly)||N/A|
|PE Ratio (TTM)||N/A|
|Forward Dividend & Yield||N/A (N/A)|
|1y Target Est||N/A|
SPT earnings call for the period ending December 31, 2020.
Half a year ago, Sprout Social (NASDAQ:SPT) was a relatively small software marketing company that wasn’t on many investors’ radars. But SPT stock has since been one of the market’s biggest winners, rising as much as 160% over the past six months as demand for the company’s social media brand management tools soar. If only you could’ve seen the big rally in Sprout’s stock coming… Well, you could have, if you were a subscriber to InvestorPlace’s bold new newsletter, The Daily 10X Stock Report. Launched in 2020, The Daily 10X is aimed at delivering to your inbox, every single day, a stock pick that could rise by at least 10X. In less than a year, we have already uncovered multiple 10X winners with startling accuracy, and dozens of triple-digit winners. Indeed, the average return across all stock picks in The Daily 10X is an astounding 110%!InvestorPlace - Stock Market News, Stock Advice & Trading Tips One of those triple-digit winners was Sprout Social. We told investors about Sprout Social’s game-changing social media brand management platform back in July 2020. Since then, investors have scored 140% returns on Sprout’s stock. If only you had been a Daily 10X subscriber back then… Rest assured, though, many more triple-digit picks are on their way. To read more about the newsletter that’s changing the industry, click here. For now, though, let’s get back to SPT — because, although it is up more than 160% over the past six months, this stock still has a lot of runway left. Indeed, you should add Sprout Social stock to your “best stocks to buy for the next 10 years” list. Here’s why: Social Discovery Is the Future The core of the bull thesis on SPT stock boils down to one very simple observation: We used to discover products and experiences through television, newspapers or magazines — now, we discover that stuff on social media. Everyone is on social media these days. About 3.8 billion people, specifically. More than that, those 3.8 billion people spend a whopping 2.5 hours every day on social media apps. In other words, the world is addicted to social media. It should be no surprise, then, that social media is becoming much more than just chatting to friends and sharing photos. It’s a place where we debate political ideas. Where we make video content. Where we (more recently) rally the troops to pump up GameStop (NYSE:GME). And, relevant to SPT stock, it’s a product discovery channel now, too. A recent Square (NYSE:SQ) survey found that 75% of U.S. consumers use Facebook (NASDAQ:FB) to discover new products, services and brands. Broadly, then, social media has become an integral part of the customer experience. As an integral part of the customer experience, social media management is turning into a mission-critical component for businesses of all shapes and sizes. In short, if a business wants to succeed, it needs to be good at social media. Huge Opportunity for Social Media Management Tools The big problem here is that businesses broadly aren’t good at social media. And why should they be? After all, businesses weren’t good at selling things through newspapers or TV. Most usually, businesses made products and services, and then tapped professional marketing firms and agencies to sell those products and services through the most appropriate channels. They outsourced marketing. Or, perhaps more specifically, they got help in marketing their products and services. But, in the social media world, everyone’s trying to do-it-yourself. There are 90 million businesses that are active on social media platforms today. Only 5% have adopted software to control and optimize their social media presence. That’s a tiny fraction. Importantly, the ones that are “getting help” on social media, are winning. Their revenues are growing faster, and they are beating out their competitors. So begins the competitive flywheel. If brand A is using professional tools to sell on social media and winning, then all of brand A’s competitors will eventually adopt similar professional tools to sell on social media, too. It’s a growth flywheel. And this growth flywheel means that, over time, that 5% number will rise to 10%, 20%, 30%, and even higher. This reality implies a huge growth runway ahead for SPT stock. Sprout Social Is the Runaway Leader In the booming social media management software space, Sprout Social reigns supreme as the best-in-breed provider of the market’s only end-to-end social media management solution which helps businesses control everything from choosing what to post, to deciding when to post, to tracking how a post did based on engagement metrics — and everything in between. It’s a powerful, fully integrated platform that helps brands facilitate social communication with customers. The platform leverages mountains of social data across its ecosystem to provide real-time insights and improve multiple business functions, from marketing to sales to support to success to product to strategy. It’s an all-in-one enterprise platform for all-things-social-media. Sprout Social is the biggest provider of these tools. They aren’t the only one. But size is a huge advantage here, since size means more data and partnerships, which means more valuable insights and more seamless integrations, and ultimately, a better platform for businesses. Thus, Sprout Social is in a prime position to continue to lead the booming social media management software space into a bright future. That, of course, is great news for SPT stock. Long Runway Ahead for Sprout Social Fortunately for investors, this decade’s boom in Sprout Social’s business is not priced into SPT stock yet, implying huge upside potential for shares over the next decade. Sprout Social has just 25,556 customers today. That’s up 11% year-over-year. But it is still just a fraction of a fraction of the 90 million businesses on social media today. Even if just a third of those businesses end up deploying social media management software by the end of the decade, then Sprout Social is tapping into less than 0.1% of its addressable market. Given the huge opportunity here, my long-term model on Sprout Social makes some optimistic assumptions about the company’s growth trajectory over the next 10 years, including: Sustained double-digit customer growth to roughly 100,000 total customers by 2030. Above 20% revenue growth per year into 2030, for revenues around $1 billion by then. Gross margin expansion toward 80%, within management’s range for long-term gross margins. Operating margin expansion toward 30%, with positive operating leverage driven by increasing revenue per customer and powerful scalability from Sprout’s software subscription business model. Under those assumptions, I see Sprout scaling toward $4.50 in earnings per share by 2030. Based on a 35 times forward earnings multiple — which is about the medium-term average for application software stocks — that equates to a 2029 price target for SPT stock of over $150. That’s up more than 150% from where shares currently trade. Bottom Line on SPT Stock The key to being a great growth investor — as we outline in The Daily 10X Stock Report — is identifying emerging hypergrowth stocks before they become big. That’s exactly what Sprout Social is. Thanks to its tiny $3 billion market cap, huge multi-hundred-billion-dollar addressable market, and leadership position in the hypergrowth social media management software sector, Sprout Social is one of my favorite stocks to buy for the long haul. That doesn’t mean you should chase SPT stock at any level. But it does mean that you should look to buy SPT stock on any future sizable dips. On the date of publication, Luke Lango did not have (either directly or indirectly) any positions in the securities mentioned in this article. The New Daily 10X Stock Report: Dozens of triple-digit winners, peak gains as high as 926%… 1,326%… and 1,392%. InvestorPlace’s bold new initiative delivers one breakthrough stock recommendation every trading day, targeting gains of 5X… 10X… even 15X and beyond. Now, for a limited time, you can get in for just $19. Click here to find out how. In addition, you can sign up for Luke’s free Hypergrowth Investing newsletter. Click here to sign up now. More From InvestorPlace Why Everyone Is Investing in 5G All WRONG Top Stock Picker Reveals His Next Potential Winner It doesn’t matter if you have $500 in savings or $5 million. Do this now. #1 Stock for the Green Energy Boom The post Why Relatively Unknown Sprout Social Stock Could Be Your Next 10X Winner appeared first on InvestorPlace.
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