10 Best Cloud Stocks To Buy According to Short Sellers

8. Workiva Inc. (NYSE:WK)

Number of Hedge Fund Investors  in Q2 2024: 19

Short Interest as % of  Shares Outstanding: 0.96%

Workiva Inc. (NYSE:WK) is one of the few companies of its kind that allows financial institutions and others to work with SEC filings for data analysis and other purposes. Key to Workiva Inc. (NYSE:WK)’s business model is its product focus on ESG analysis. This creates opportunities and headwinds for the firm. On the former, since it is among the few firms of its kind, Workiva Inc. (NYSE:WK) dominates the market and controls a 70% share. This is key for its cloud model since it allows the firm to generate hefty recurring revenue. It is also planning to grow its free cash flow margin to 22% by 2027, which should help Workiva Inc. (NYSE:WK)’s Rule of 40 reading. However, the firm faces significant risks in case the investment world shifts away from ESG, and Workiva Inc. (NYSE:WK)’s niche nature also means that its sales conversion cycles are longer than the general industry as investors take their time to evaluate its products.

Artisan Partners mentioned Workiva Inc. (NYSE:WK) in its Q1 2024 investor letter. Here is what the firm said:

“Our profit cycle thesis is based on the company’s capability to identify and quickly roll out new products, effort to expand beyond North America and opportunity to benefit from increasing ESG regulatory reporting longer term. While the company reported financial results that exceeded expectations, shares declined due to disappointing forward guidance. However, we remain invested on the belief that trends are supportive of multiyear growth.”