TL;DR
Enter SSTK at $33 (1.2 B market cap). SSTK’s significant subscriber base offers downside protection with an estimated intrinsic value of $65, representing an upside 24% 3yr cagr for 2027.
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Key Points:
What do they do
- Connects brands w/content like images, footage, music, & 3D models. Offerings include licensing, metadata for machine learning(ml), distribution through Giphy, & content customization
Why undervalued
- Negative market behavior sentiment of SSTK’s traditional business model
- Competitive pressures and disruption
Downside Risk/Protection
- ~470,000 subscriber base before Envato deal closure
Upside Potential
- Envato deal adds 635,000 subscribers
- Low capex DDS segment ignored by market
Why Invest Now?
- Bouncing along historic lows back when customer & transaction count was significantly lower
- Paying nothing for a lumpy but growing business segment of metadata services, content distribution services with newly acquired GIPHY in 2023
SSTK is a long. SSTK presents an intriguing investment opportunity worth approximately $65 a share fueled by its vast subscriber base, strategic investments in AI, and the burgeoning demand for ML & AI training data. However, short sellers are weighing challenges like customer attrition, fierce competition, and pricing pressures
Summary
Shutterstock Inc. (SSTK), a content creation platform known for its library of stock content, including images, footage, music, and 3D models, is at a critical juncture. Despite its strong brand presence and history of profitability, there are challenges to its long-term prospects.
The company’s recent acquisition has helped strengthen its subscriber base by 135% in the most recent quarter, solidifying its margin of safety. However, the stock trades at a relatively low price of 4.5x our 2025 EBITDA conservative estimate of $268M. Investors have not fully appreciated management’s commitment to multi-year revenue and EBITDA expansions for 2027 and quarterly cash dividends standing currently at an…
Potential Catalyst
New CFO Rikki Powell has a long career out of competitor GETY which will make for an interesting next three years
M&A possibilities potentially w/ Getty Images
Dividend payouts