BigCommerce Holdings (BIGC) shareholders are likely dissatisfied.
Shares have fallen more than 65% over the past six months and have significantly underperformed the stock market.
However, I am still bullish on this stock for the following reasons.
The U.S. Federal Reserve’s plan to hike interest rates in March may be less aggressive than forecasted until a few days ago, amid concerns that sanctions against the Russian Federation over the war in Ukraine could harm global economic growth.
As a result, despite the monetary tightening, borrowing may still be affordable for many growing tech companies, including BigCommerce Holdings. The company will have the financial backing to accelerate some innovations and potentially set the stock price up for a strong recovery.
BigCommerce owns and operates a platform that provides e-commerce technology solutions through open Software-as-a-Service (SaaS) for merchants of all sizes to create and innovate the layout of their stores online, helping them to grow.
BigCommerce customers are B2C and B2B companies in more than 150 countries worldwide and belong to different industries. The portfolio includes well-known brand names such as Ben & Jerry’s, Molton Brown, S.C. Johnson & Son, Skullcandy, SoloStove and global telecoms provider Vodafone Group (VOD).
The company is headquartered in Austin, Texas.
Q4 2021 Results
Thanks to a high level of customization implied by the company’s technology solutions and the strong performance of the platform, total revenue increased 50% year-over-year to nearly $65 million in the fourth quarter of 2021, beating analysts’ median forecast by about $3 million.
The income statement closed again with a net loss, but this time at -$0.17 per share (versus -$0.12 last year) and missed the average consensus estimate by $0.05.
Subscription contribution to total revenue for the fourth quarter of 2021 was 72.3%, or $46.9 million, up 58% year-over-year.
For the first quarter of 2021, the company is forecasting total revenues in the range of $61.9 million to $65.1 million, while analysts’ forecasts are for a median of $63.84 million.
Adjusted operating loss is expected to be between $11.5 million and $13.5 million.
For the full-year 2022, the company is forecasting total revenue of $271.6 million to $283.6 million, while the analysts’ average forecast is $277.19 million.
The company expects adjusted operating loss to range from $45.9 million to $53.9 million.
As of December 31, 2021, cash and short-term investments totaling $401.02 million exceeded total debt of $348.41 million, the latter resulting in 2021 interest expenses of $828,000.
Operations are still generating negative cash flow and adjusted EBITDA of -$40.3 million and -$20.03 million, respectively.
Globalization requires companies to have a website so that products and services can reach all markets, even the most remote ones. The website isn’t good enough if it doesn’t allow the business to get the maximum benefit from online trading.
These need to be constantly updated and have a new layout in order to attract more customers, while running e-commerce in a safe place from malicious activities of hackers and other cybercriminals.
So, the demand for services from BigCommerce and other operators will grow with the expected strong expansion of online commerce, and various statistics available online estimate that this will reach $7.5 trillion in three years (up more than 50% from the current level).
BigCommerce wants to realize its potential by focusing on fast-growing multinational companies.
Wall Street’s Take
BIGC holds a Moderate Buy consensus rating on TipRanks, based on nine Buys and five Holds assigned in the past three months.
The average BigCommerce Holdings price target is $56.22, implying a 68.4% upside potential.
The market for providers of technologies to make electronic business possible and enhance its performance is vast and offers many opportunities.
The competition is fierce, but BigCommerce Holdings appears to have shaped its growth strategy accordingly. If this is backed up by not-too-aggressive monetary tightening, the bottom line should turn into profit.
The continued increase in sales, coupled with a favorable outlook, provides a good chance for the stock price to rebound strongly.
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