Amidst the thundering dominance of Big Tech on the stock market stage, championing the virtues of artificial intelligence, small-cap entities emerge—glinting under the spotlight of investors’ attention. Fueled by mounting sentiments for prospective rate cuts in September, these agile minnows are ready to dance in the limelight—especially following the lackluster Q2 earnings experience of giants like Tesla and Alphabet, which viciously mauled the Nasdaq Composite to its darkest day since 2022.
In the eyes of Tom Lee, the sage head of research at Fundstrat, the billowing low Consumer Price Index (CPI) in June is the beacon signaling small-caps to charge forth with unbridled fervor. Lee prophesies a nearly 50% surge in the year ahead—an oasis in the investment desert. Nestled on the shoulders of numerous supportive winds, Lee sees small-caps beckoning as the most tantalizing investment fete on the near horizon.
Light on the Horizon: Small-Cap Stock Gems
Small-Cap Stock #1: Archer Aviation
Nestled within the Californian borders, helming a $1.41 billion market cap, Archer Aviation Inc. (ACHR) soars through urban air mobility’s horizons with an ingenious electric vertical takeoff and landing (eVTOL) aircraft. Crafted for the celestial minuet of air taxi services, Archer’s eVTOL promises to rewrite the urban transport saga, offering a ballet of seamless city movements. As a forerunner in aviation’s electrifying sphere, Archer pens the future’s next chapter with its avant-garde marvels.
Despite a year-to-date plunge of nearly 29%, Archer’s stock has surfaced from the abyss over the past lunar month, delivering a 17% floral return.
In the ancient scrolls of May 9, this pre-revenue dragon unfurled its Q1 earnings, aligning with Wall Street’s forecasted prophecy. Archer’s Q1 dirge chanted a loss of $116.6 million, or $0.36 per share. Concluding Q1, a treasury call of $523 million graced Archer’s coffers, bearing $406 million in treasures and $117 million in bridges to the ethers—spearheading Archer’s voyage to a heavenly commercial dawn.
Amidst the financial orchestra, Q1 spotlighted Archer’s flagship eVTOL, Midnight—a crescendo of triumph as it soared through over 100 flights, set to eclipse the zenith of 400 flights this year. A nod from the Federal Aviation Administration (FAA) granted Archer celestial acclaim, treading closer to the hallowed day of electric air taxi service inauguration—an anthem to urban air’s radiant tomorrows.
Threshold-hammered by Q2’s looming gates set to creak open after the bell tolls on August 8, Archer sets its sights on FAA’s Midnight certification—a cosmic milestone within reach, etched in the stars. Sages predicting Archer’s fiscal gales foresee losses trimming by 21.3% in 2024’s chimes, whispering another 14.3% bugle lowering in 2025.
ACHR stock basks under a unanimous “Strong Buy” narrative. Amongst the seven mystics in coverage, five chant of “Strong Buy,” one offers a “Moderate Buy” incantation, and lone watcher adopts a “Hold” mask.
The prophet’s decree of an average price target at $8.64 beckons a symphony of a 97.3% ascension from present altitudes. The ethereal high of $12.00 sets eyes alight, a promise for a potent 173.9% gala.
Small-Cap Stock #2: Similarweb
Girded with a $511 million market buckler, Similarweb Ltd. (SMWB)—a digital diviner from the holy lands of Israel—unveils online seership, empowering data-driven decisions amidst the digital juncture. Breathing life into biz-routes with its vital web analytics and user-friendly relics, Similarweb steers businesses in the digital esplanade of strategy crafting, customer acquisition polishing, and monetization blossoming.
Similarweb’s stock ascends on a YTD pinnacle, scaling a 22% acme, casting shadows over the S&P 500’s 13.8% ballet over the identical trip.
In the ancient scrolls of early May, Similarweb’s Q1 symphony resonated beyond the stars of Wall Street’s predictions—its revenue crescendoed to $59 million, notating a 12% year-over-year serenade. The loss per share hymn dwindled to a mere $0.03 from the abyssal chasm of $0.15 in the yesteryear’s tale.
Gallant knights of non-GAAP territories ushered forth—an opulent $0.04 show per quartz, a reverent turn from the lossy cacophony of $0.09 in Q1 of bygone 2023. Amidst the gates of free cash gushing forth with $9.7 million symphonies, the chalice of customers overflowed to 4,844—an attendee increase of 16% over starry nights.
Revolutionizing Small-Cap Stocks: A Dive into Fiscal Optimism
Seizing Opportunities: Similarweb’s Strategic Acquisitions and Projections for Growth
Similarweb’s recent acquisition of Admetricks and the launch of SAM, an AI-powered Sales Assistant Module, clearly indicate a steadfast commitment to augmenting its unique data and solutions. As the company gears up for its Q2 earnings release on August 6, management foresees a 12% year-over-year growth in total revenue, estimated to be between $60 million to $60.5 million. Additionally, a non-GAAP operating profit ranging from $1.5 million to $2 million is expected.
Looking ahead to fiscal 2024, Similarweb projects total revenue in the range of $242 million to $246 million, demonstrating a consistent 12% annual growth trajectory. Analysts anticipate a significant 60.5% reduction in GAAP loss for the company in fiscal 2024 and a further 26.7% improvement in fiscal 2025. The overall sentiment from analysts regarding SMWB stock is optimistic, with a unanimous “Strong Buy” rating from all seven analysts providing coverage.
The average analyst price target of $10.83 suggests a potential upside of 66% from current levels, while the street-high price target of $14 envisions a remarkable rally of up to 115% for the stock.
The Rise of Fintech: Dave Inc.’s Meteoric Ascent in the Small-Cap Space
Founded in 2015, Dave Inc. (DAVE) has emerged as a prominent U.S. neobank and fintech innovator, catering to millions of American consumers. Leveraging disruptive technologies, Dave offers premium banking services at a fraction of the cost compared to traditional financial institutions, reshaping the financial landscape. With a market capitalization of $438 million, Dave has captured the market’s attention.
Over the past 52 weeks, shares of Dave have skyrocketed by a remarkable 564% and surged 321% year-to-date, outpacing the broader market returns by a substantial margin. The positive momentum continued as Dave witnessed a 12.4% surge in share value following the stellar Q1 earnings results announcement on May 7.
The Q1 earnings report revealed an impressive 25% year-over-year growth in total operating revenue, reaching $73.6 million, driven by enhancements in member retention and Average Revenue Per User (ARPU). Adjusted EPS soared to $0.62, showcasing a significant turnaround from the previous year’s adjusted loss per share of $0.63. The company closed the quarter with approximately $101.5 million in cash, cash equivalents, and marketable securities.
CEO Jason Wilk expressed satisfaction with the Q1 performance, noting the company’s continued growth in ExtraCash advances and credit performance enhancements driven by their CashAI underwriting engine. Bolstered by the robust start in fiscal 2024, management raised its adjusted EBITDA guidance for the year to a range of $30 million to $40 million, with total operating revenue expected to fall between $305 million and $325 million by year-end.
Analysts foresee a significant 95.7% reduction in GAAP loss for Dave in fiscal 2024, with a projected profit of $1.77 per share in fiscal 2025. The sentiment surrounding DAVE stock remains bullish, with all four covering analysts unanimously recommending a “Strong Buy,” indicative of growing investor confidence.
The average analyst price target of $64.50 implies a potential upside of 82.3% from current levels, while the street-high price target of $75 projects a substantial rally of up to 112% for the stock.