For my entry into InvestorPlace’s Best Stocks for 2021 contest, I submitted a “sleeper” decide again in late December that shocked loads of my colleagues: micro-cap influencer advertising software program supplier IZEA (NASDAQ:IZEA). But this sleeper decide has was one of the contest’s greatest winners to this point. At this second, IZEA inventory at present holds the No. 2 spot in the Best Stocks for 2021 contest, with a jaw-dropping year-to-date achieve of 109% (it’s solely been three months).
Source: by InvestorPlace
So, what’s behind the large surge in IZEA in 2021?
Accelerating enterprise quantity, sparked by a speedy shift amongst enterprises towards digitally native influencer advertising in a world the place shoppers have gotten more and more distrustful of advertisements.
More importantly, although, will this large surge in IZEA Worldwide proceed for the relaxation of the 12 months?
In brief: Yes.
The firm’s underlying enterprise quantity will proceed to speed up. More importantly, the better part of the firm’s progress narrative — its newly launched Shake market for influencers — has but to indicate as much as the celebration.
Once that new platform features critical traction in the again half of 2021, IZEA’s inventory may see a turbo-charged rally.
With all of that in thoughts, let’s dive in and take a better have a look at IZEA.
IZEA Stock Is in for Huge Gains in 2021
As I stated earlier than, shares of IZEA Worldwide are up 109% YTD. That’s an enormous achieve. For reference, the index that IZEA belongs to — the Nasdaq — is up simply 4.5% over the identical interval.
What’s behind the large rally? Huge progress.
Over the previous three months, the firm has signed a number of new contracts and contract extensions in its Managed Services enterprise — the place IZEA runs influencer advertising campaigns for clients. These contract wins usually are not small. In one of them, the U.S. navy basically doubled the measurement of its first contract with IZEA from again in November 2020.
All this new enterprise is driving large progress. In the fourth quarter of 2020, IZEA reported a 47% enhance year-over-year in Managed Services bookings. In the first quarter of 2021, that progress fee surged to over 100%.
So, in impact, IZEA’s enterprise is doubling YOY now — and its progress trajectory is accelerating.
That’s spectacular. It speaks to the actuality that corporations of all sizes and shapes are extra critically pursuing influencer advertising campaigns as shopper belief fashions more and more shift from “I belief what this advert is saying” to “I belief what this individual is saying”. It additionally speaks to the actuality that the majority corporations do not know what they’re doing in the influencer advertising world, and subsequently, want a third-party like IZEA to successfully run their influencer advertising campaigns.
More To Come for IZEA
The aforementioned shopper belief mannequin shift from advertisements to individuals is a secular pattern with a multi-year runway. As such, over the subsequent a number of years, increasingly more corporations will enhance their influencer advertising spend, whereas spend on IZEA’s Managed Services enterprise will proceed to surge.
Of course, all through the stability of 2021, IZEA’s Managed Services enterprise will even profit from a rebound in advert spending as the financial system normalizes and shopper spending and exercise rebound.
All of that sturdy progress ought to maintain the at present rally in IZEA’s inventory.
However, the massive upside will come from Shake. IZEA launched Shake in late 2020 as a market for influencers. In brief, influencers listing their “abilities” on Shake, and types flick through the market to contract influencers for their campaigns.
Sure, Shake has but to show right into a significant half of IZEA’s enterprise. But the potential upside therein is gigantic. Indeed, the key to IZEA Worldwide’s inventory hovering from under $5, to $10 or greater, depends squarely on the shoulders of Shake.
Management is simply now beginning to implement initiatives to develop Shake’s platform consciousness. Over the previous month, Shake has added each Clubhouse help and Twitter Spaces help, whereas additionally rolling out a 45-day marketing campaign referred to as the Parade of Stars, whereby IZEA will probably be unveiling a brand new influencer on Shake every enterprise day by the finish of April with a view to bolster and spotlight the expertise on Shake.
I think these initiatives will lead to significant Shake adoption by the halfway level of 2021, and that this platform will begin to flip right into a “massive deal” by the second half of 12 months. When it does, that could possibly be the catalyst which sparks a fair larger rally in IZEA. A double-digit inventory worth shouldn’t be out of the query by 12 months finish.
Bottom Line on IZEA Stock
IZEA Worldwide stays my high small-cap inventory decide for 2021. It’s already up 109% YTD, and the greatest performing inventory in the Best Stocks for 2021 contest. But, with Shake catalysts on the horizon, I feel IZEA inventory’s massive 2021 rally is simply getting began.
On the date of publication, Luke Lango didn’t have (both instantly or not directly) any positions in the securities talked about on this article.
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