IZEA Worldwide, Inc. (IZEA), which is headquartered in Winter Park, Fla., is a marketing technology company that provides software and professional services that allow companies to cooperate and transact with today's top social influencers and content creators. The company is a champion for the burgeoning “Creator Economy,” allowing people to monetize their material, creativity, and influence.
IZEA’s shares have gained nearly 50% in price over the past month owing to its impressive financial performance in its last reported quarter. Its Managed Services team had its largest quarterly bookings in company history, with contracts totaling $12.1 million, exceeding $12 million for the first time since its inception.
However, its shares have declined 61.6% over the past year to close yesterday's trading session at $1.55. In addition, the stock is currently trading 72.3% below its 52-week of $5.58.
Here is what could shape IZEA's performance in the near term:
Uncertainty related to Metaverse
The term 'metaverse' has lately gained traction after social networking giant Facebook changed its name to Meta Platforms Inc. (FB), and Microsoft Corp. (MSFT) has staked its claim to this newest creative hyper-real alternative universe based on augmented reality. However, considering the metaverse is still being built and the issue of privacy invasion has been raised, its near-term prospects look uncertain.
Poor Profitability
IZEA's 0.21% CAPEX/Sales multiple is 94.7% lower than the 0.46% industry average. Also, its net income margin, ROA, and ROC are negative at 10.5%, 3.5%, and 6.2%, respectively. And its cash from operations stood at a negative $2.57 million compared to the $299.40 million industry average.
Mixed Growth Prospects
Analysts expect IZEA's revenue to increase 36.6% in the current year and 30.5% next year. However, its EPS is expected to decline 80% and remain negative in the current year.
POWR Ratings Reflect Uncertainty
IZEA has an overall C rating, which equates to Neutral in our proprietary POWR Ratings system. The POWR ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree.
Our proprietary rating system also evaluates each stock based on eight distinct categories. IZEA has a D grade for Stability. The stock’s 2.72 beta is consistent with the Stability grade.
Among the 71 stocks in the F-rated Internet industry, IZEA is ranked #15.
Beyond what I have stated above, one can view IZEA ratings for Value, Growth, Momentum, Sentiment, and Quality here.
Bottom Line
While the company possesses strong profitability and has exhibited robust financial performance in its last reported quarter, its mixed near-term growth prospects could raise investors' concerns. So, we think investors should wait for the company's prospects to stabilize before investing in the stock.
How Does IZEA Worldwide Inc. (IZEA) Stack Up Against its Peers?
While IZEA has an overall C rating, one might want to consider its industry peer, trivago N.V. (TRVG), which has an overall A (Strong Buy) rating, and Yelp Inc. (YELP) and Travelzoo (TZOO), which have an overall B (Buy) rating.
Note that TRVG is one of the few stocks handpicked by our Chief Growth Strategist, Jaimini Desai, currently in the POWR Stocks Under $10 portfolio. Learn more here.
IZEA shares fell $1.55 (-100.00%) in premarket trading Wednesday. Year-to-date, IZEA has gained 11.94%, versus a -5.54% rise in the benchmark S&P 500 index during the same period.
About the Author: Pragya Pandey
Pragya is an equity research analyst and financial journalist with a passion for investing. In college she majored in finance and is currently pursuing the CFA program and is a Level II candidate.
Is IZEA Worldwide a Smart Metaverse Stock to Add to Your Portfolio? StockNews.com
