In this article, we will discuss the 10 Worst Communication Services Stocks to Buy According to Short Sellers.
Artificial intelligence (AI) and automation are 2 of the most transformative and consequential technologies that are expected to impact telecommunications since the advent of 5G. Integration of AI into networks and operations should help in optimizing performance, automating tasks, and improving customer service. Well-established telecom companies continue to leverage AI-powered predictive analytics to track and project maintenance works so that network reliability and efficiency are maintained.
As a result of the expansion of the 5th-generation mobile network (5G), a range of telecommunication providers continue to deliver faster data speeds and greater network capacity. Wi-Fi technology pioneer Qualcomm expects that 5G should be responsible for supporting more than $13 trillion in global economic output by 2035.
As per Infopulse, in 2021, the global telecom IoT market size was pegged at $19 billion. By 2031, this should exceed the $185.5 billion mark, exhibiting a CAGR of 27.71%. One critical use case, which explains why IoT is getting traction in the sector, incorporates equipment monitoring and hazard detection.
In 2024, political ad spending is expected to be in the range of $10.2 billion and $12 billion (as per Basis Technologies). These numbers exhibit a rise of 13%-30% from the 2019-2020 election cycle. For advertising and media agencies, this can result in higher CPMs—primarily during certain periods, certain locations, and on certain channels.
Expansion of 5G Technology and Plans for 6G
5G will be more scalable and capable of handling bigger data loads, therefore, it is associated with the Internet of Things (IoT). 5G can also support advanced technologies like augmented reality (AR) and virtual reality (VR). The Wi-Fi technology pioneer believes that the development requirements of the new 5G network should expand beyond the traditional mobile networking players to segments like the automotive industry. Experts believe that the 5G value chain (which includes OEMs, operators, content creators, and the like) might support up to 22.8 million jobs, or over one job for every person in Beijing, China.
The stage is being set for the 6th generation (6G). This technology is expected to incorporate AI at the edge and in networks fully, allow reliable operation of autonomous vehicles, and automation in industrial manufacturing, and should power “smart factories.” 6G should take extended reality (XR) to brand new levels and will allow lightweight devices which can be deployed at a similar scale as today’s smartphones. Emerging capabilities such as digitization of multisensory aspects (like human senses of touch, smell, sight, and taste), improved sensor fusion and brain-computer interface should help deliver hyper-realistic experiences (such as holographic teleportation).
While 5G established a technical foundation for high-performance industrial IoT, 6G is expected to unleash the full potential of next-gen robotics, such as delivery robots, service robots, and autonomous and collaborative robots.
Communication service providers (CSPs) should start realizing the value of highly-touted 5G use cases like vehicle-to-vehicle communication, and virtual reality-based immersive metaverse networking. One of the most promising cases for CSPs is Wi-Fi upgrade—from broadband to fixed wireless access and private 5G. The use cases of 5G and operational automation will rely on CSPs’ ability to create cloud-native network platforms with end-to-end programmability.
GenAI Revolution
The global unified communications market was pegged at US$63.82 billion in 2023 and should compound at 12.70% between 2024 – 2032 (as per Polaris Market Research). This growth should stem from strong growth because of the increased usage of mobile devices and the adoption of Bring Your Device (BYOD) policies. Enhancing enterprise communication for improved productivity and cloud-based unified communication should also act as growth enablers.
Generative AI is expected to drive a seismic shift in the communication services transformation agenda. Efficiency, cost-effectiveness, improved IT services, data-driven intelligence, and network connectivity should act as the backbone of GenAI-propelled customer experience.
The communications and media companies’ top AI objectives in 2024 should optimize network performance and reduce downtime. Collectively, these are expected to improve the quality of service. These companies are planning to deploy AI for real-time detection of and response to network issues. This will help in the rollout of high-bandwidth, low-latency applications, and services. Artificial intelligence helps in driving predictive analytics which facilitates detecting and resolving network issues before the service disruption.
With more and more computing workloads being distributed throughout remote data centers, latency is expected to drop, bandwidth should increase, and organizations are expected to gain more sovereignty over their data. Edge computing enables real-time data processing, which should unlock use cases across industries— ranging from remote healthcare treatment and remote management of mining operations to sustainability solutions including smart grids optimizing energy consumption.
A close up of a satellite in space, showing the advanced technology of communications systems.
Our methodology
To list the 10 Worst Communication Services Stocks to Buy According to Short Sellers, we used the Finviz screener to filter out stocks catering to the broader communications sector. Next, we narrowed our list of stocks by selecting the ones having high short interest. Finally, the stocks were ranked in ascending order of their short interest.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
10 Worst Communication Services Stocks to Buy According to Short Sellers
10) Zillow Group, Inc. (NASDAQ:Z)
Short % of Float (15 August 2024): 10.56%
Number of Hedge Fund Holders: 57
Zillow Group, Inc. (NASDAQ:Z) is a tech real-estate marketplace company. The company communicates information about homes, real estate listings, and mortgages through digital mediums such as websites and mobile applications.
In early 2024, Zillow Group, Inc. (NASDAQ:Z) was targeted by a short seller, Spruce Point Capital Management. The company was betting against the stock, highlighting challenges, including antitrust litigation. The short seller argued that the core business model of selling marketing services to real estate agents is under pressure. This is because of antitrust litigation associated with broker commissions in the US housing industry. This litigation can impact Zillow Group, Inc. (NASDAQ:Z)’s customer base.
Wall Street analysts believe that, over the long term, Zillow Group, Inc. (NASDAQ:Z) is expected to be supported by its strong brand power and market presence. Also, the company’s product prowess over the years has placed it in an attractive position of having a large audience. This should help it achieve organic growth. This product-led organic marketing growth story is expected to support its market position. Such strong organic growth has been possible because of its superior data science and technological capabilities, which act as key competitive advantages.
Zillow Group, Inc. (NASDAQ:Z)’s focus on digitizing its real estate process with the help of its housing super app should continue to contribute to its strong performance, and rentals and mortgage segments are expected to be primary beneficiaries. The company focuses on maintaining cost control and reaching profitability by targeting revenue growth and reducing stock-based compensation.
For 3Q 2024, the company anticipates its residential revenue in the range of $375 million and $385 million, with total revenue to be between $545 million and $560 million. Analysts at Deutsche Bank Aktiengesellschaft increased their target price on the shares of Zillow Group, Inc. (NASDAQ:Z) from $55.00 to $60.00, giving the stock a “Buy” rating on 9th August.
As per Insider Monkey’s 2Q 2024 database, Zillow Group, Inc. (NASDAQ:Z) was in the portfolios of 57 hedge funds, with total stakes amounting to $881.1 million.
9) iQIYI, Inc. (NASDAQ:IQ)
Short % of Float (15 August 2024): 10.70%
Number of Hedge Fund Holders: 17
iQIYI, Inc. (NASDAQ:IQ) provides video entertainment services. It offers movies, television dramas, variety shows, and other video content.
Earlier, The Securities and Exchange Commission (SEC) launched a probe into the company, after Wolfpack accused iQIYI, Inc. (NASDAQ:IQ) of fraud and inflating its numbers. Wolfpack Research accused the company of inflating its 2019 revenue by ~8 billion yuan ($1.13 billion) to ~13 billion yuan ($1.98 billion) — or between 27% – 44%. The research firm also claimed that iQIYI, Inc. (NASDAQ:IQ) overstated its user numbers and expenses. As of 15th August 2024, iQIYI, Inc. (NASDAQ:IQ)’s short % of float stood at ~10.7%, which continues to weigh over its stock price. The company’s stock has seen a decline of over ~55% in just one year. In 2Q 2024, its total revenues came in at RMB7.4 billion (US$1.0 billion), reflecting a fall of 5% YoY and membership services revenue was RMB4.5 billion (US$618.6 million). This revenue fell 9% YoY, mainly due to fluctuation in the content slate performance.
However, Wall Street analysts believe that iQIYI, Inc. (NASDAQ:IQ) is now well-placed to take off. Moving forward, it plans to improve content quality and stability to attract and retain users. The company continues to make investments in technology, like AI and virtual production tools, which should help it drive future revenue and earnings growth. This is expected to reduce content costs. Also, in 2Q 2024, its content distribution revenue sat at RMB698.2 million (US$96.1 million), demonstrating a rise of 2% YoY.
iQIYI, Inc. (NASDAQ:IQ)’s strategic adjustments can act as a growth enabler. The company is focusing on long-term membership revenue, which is expected to act as a catalyst. Moreover, the company’s strategic investments in content and technology are expected to further strengthen its market position. These investments should help the company deliver premium content which balances artistic merits and commercial benefits.
The number of hedge funds in Insider Monkey’s database owning stakes in iQIYI, Inc. (NASDAQ:IQ) stood at 17 in the second quarter. Based on 9 Wall Street analysts, the average price target on the shares of iQIYI, Inc. (NASDAQ:IQ) is $3.59.
8) Charter Communications, Inc. (NASDAQ:CHTR)
Short % of Float (15 August 2024): 12.47%
Number of Hedge Fund Holders: 48
Charter Communications, Inc. (NASDAQ:CHTR) operates as a cable telecommunications company. It offers cable broadcasting, internet, voice, and mass media services.
In late November 2023, The Securities and Exchange Commission announced the settled charges against Charter Communications, Inc. (NASDAQ:CHTR) for violating internal accounting control requirements associated with its stock buybacks.
According to the order, the company’s board authorized company personnel to conduct certain buybacks by using trading plans conforming to SEC Rule 10b5-1, which protects companies and individuals from insider trading liability. This rule also includes a requirement that they do not retain the ability to change the planned purchases or sales post the adoption of a trading plan.
SEC’s order finds that, between 2017 to 2021, the company used plans that consisted of “accordion” provisions, which the company’s personnel described as giving Charter Communications, Inc. (NASDAQ:CHTR) flexibility. This allowed the company to change the total dollar amounts available to buy-back stock and to change the timing after the plans took effect. Without admitting or denying, the company decided to cease and desist from further violations and pay a civil penalty amounting to $25 million.
However, Wall Street analysts believe that Charter Communications, Inc. (NASDAQ:CHTR)’s cable networks have provided significant competitive advantage as high-quality internet access is now regarded as a staple utility. Morning Star reported that the company has ~70% of the internet access market throughout the territories it serves. Also, the company has been able to upgrade its network to cater to consumer demand for faster speeds at a modest incremental cost. Its efficient scale and cost advantage are expected to act as critical tailwinds.
The company has an extensive customer base and network reach, which provides a solid foundation for sustained revenue streams and economies of scale. As of June 30, 2024, the company had a total of 31.8 million residential and SMB customer relationships.
In the second quarter, 48 hedge funds held positions worth $4.49 billion in Charter Communications, Inc. (NASDAQ:CHTR). TD Cowen upped their price target on the shares of Charter Communications, Inc. (NASDAQ:CHTR) from $488.00 to $525.00, giving it a “Buy” rating on 29th July. Parnassus Investments, an investment management company, released the first quarter 2024 investor letter. Here is what the fund said:
“During the quarter, we added new positions in Pfizer, NICE and Charter Communications, Inc. (NASDAQ:CHTR). NICE is a leading cloud contact center software company. Charter’s stock had fallen due to near-term concerns, which we believe will not have a major impact on the long-term value of the business. Charter Communications has had several issues that created short-term uncertainty. We assessed that these issues have limited impacts on the long-term value of the business and initiated a position to take advantage of the stock’s historically low valuation.”
7) AMC Entertainment Holdings, Inc. (NYSE:AMC)
Short % of Float (15 August 2024): 14.22%
Number of Hedge Fund Holders: 19
AMC Entertainment Holdings, Inc. (NYSE:AMC) is involved in the theatrical exhibition business. The company owns, operates, or has interests in theatres which are located in the United States and Europe.
In the mid of August 2023, AMC Entertainment Holdings, Inc. (NYSE:AMC) got hit with a class-action lawsuit on behalf of preferred shareholders challenging its stock conversion plan. This came after the company ended a bruising legal fight with different investors. The company got court approval regarding the settlement of a class action lawsuit by holders of its common stock. This paved the way for the company to convert its preferred stock (APEs) to common shares. The company then mentioned that the conversion plan was critical to strengthen its finances.
However, in May 2024, a pension fund and the company’s investor defended a settlement they negotiated with AMC Entertainment Holdings, Inc. (NYSE:AMC) so it could go ahead with the stock conversion being opposed. One of the retail traders is asking Delaware Supreme Court to reverse the settlement which was approved in August 2023 by a lower court. This investor alleged that the pension fund and the individual investor colluded with AMC Entertainment Holdings, Inc. (NYSE:AMC) to dilute meme stock investors in the conversion of preferred equity units into common stock, reported Bloomberg. The investor’s attorney, Anthony Rickey of Margrave Law LLC, highlighted that the conversion has left some shareholders destitute.
The reversal of the order will offer these shareholders hope for recovery from the defendants who did wrong to them.
However, Wall Street analysts and market experts believe that the stock holds strong growth potential over the long term, considering its well-diversified theater experience and loyalty program. AMC Entertainment Holdings, Inc. (NYSE:AMC) provides a loyalty program called AMC Stubs. This includes several tiers with varying benefits, like free upgrades on concessions and reward points. As a result, this is expected to help the company enhance customer loyalty and repeat business.
Moreover, the company’s subscription service, AMC Stubs A-List, provides steady revenue visibility for the long term. AMC Entertainment Holdings, Inc. (NYSE:AMC)’s partnerships with film studios and distributors should act as a competitive advantage, which should help it achieve revenue and earnings growth. For example, its recent alliance with REI to showcase outdoor-themed short films provides a strong opportunity for cross-promotions.
On 12th August, Morgan Stanley gave the price target of $10.00 on the shares of AMC Entertainment Holdings, Inc. (NYSE:AMC). As per Insider Monkey’s database, 19 hedge funds reported owning stakes in the company, up from 17 in the preceding quarter.
6) fuboTV Inc. (NYSE:FUBO)
Short % of Float (15 August 2024): 14.23%
Number of Hedge Fund Holders: 13
fuboTV Inc. (NYSE:FUBO) is an internet television service provider. It focuses mainly on channels that distribute live sports, plus news, network television series, and movies.
fuboTV Inc. (NYSE:FUBO) is exposed to numerous business risks, such as intense business competition and higher costs. Short sellers continue to bet against this stock as it’s a loss-making company. On $391 million in revenue in 2Q 2024, the company saw a net loss of $25.8 million and an adjusted EBITDA loss of $11.0 million. Also, it posted a free cash flow loss of $35.3 million. Apart from this concern, fuboTV Inc. (NYSE:FUBO) has minimal resources earmarked for marketing.
However, Wall Street analysts believe that the company’s stock is expected to move northwards moving forward. Media giants Disney, Fox, and Warner Brothers Discovery focused on launching a direct-to-consumer (DTC) sports streaming application named Venu. Recently, fuboTV Inc. (NYSE:FUBO) was given a preliminary injunction from the courts to cease the Venu application. While this is just an initial stoppage, it should help the company dodge some potential competitors for now.
Improvement in the margins supported in improving the company’s cash burn. At its lowest level, its FCF burn was $360 million a year. However, over the previous 12 months, this burn was less than $150 million. Therefore, fuboTV Inc. (NYSE:FUBO) appears to be in a much better spot than it was earlier. Moreover, the company’s high-quality streaming technology and user interface should continue to help in improving its average revenue per user. Also, its strong partnerships with sports leagues and media companies are expected to drive growth. For example, in 2023, fuboTV Inc. (NYSE:FUBO) joined hands with ViacomCBS to cement its programming lineup and reach.
fuboTV Inc. (NYSE:FUBO) expects North American subscribers in 2024 to increase by 7% YoY at the midpoint. The number of subscribers is expected in the range of 1.725 million – 1.745 million. Also, the company repurchased $46.9 million of convertible debt. It issued stock to finance these repurchases. As a result of this move, it was able to reduce its debt, enhance shareholder value, and improve financial flexibility.
Analysts at Needham & Company LLC initiated a coverage on the shares of fuboTV Inc. (NYSE:FUBO), giving it a “Buy” rating and setting a price target of $2.00 on 19th August. At the end of 2Q 2024, 13 hedge funds owned stakes in fuboTV Inc. (NYSE:FUBO), with total stakes amounting to $23.9 million.
5) Fox Corporation (NASDAQ:FOXA)
Short % of Float (15 August 2024): 15.39%
Number of Hedge Fund Holders: 37
Fox Corporation (NASDAQ:FOXA) operates as an entertainment company. It produces and licenses news, sports, and entertainment content for distribution via cable television systems, direct broadcast satellite operators, and telecommunications companies.
Over the past 6 months, the shares of Fox Corporation (NASDAQ:FOXA) have seen a run-up of more than ~30%. Short sellers believe that the political ad spending enthusiasm had already been reflected in the company’s stock. Moreover, short sellers believe that the company’s dependence on the traditional pay-TV bundle for nearly all its top line can create a problem over the long term. Therefore, there is some uncertainty regarding its long-term strategy, with the media ecosystem increasingly transitioning to digital.
Next, short sellers believe that there are some concerns related to valuations too. The stock of Fox Corporation (NASDAQ:FOXA) currently trades at ~10.9x its forward earnings, which seems to be stretched, considering that the sectoral average hovers at ~8.8x.
However, Wall Street analysts remain optimistic about Fox Corporation (NASDAQ:FOXA). They believe that its brand strength, primarily in news and sports broadcasting, should act as a formidable asset. Its portfolio, such as Fox News and the FOX broadcast network, can command significant audience loyalty and interest among advertisers. Its owned and operated local television stations should continue to strengthen its market presence, offering direct connections to advertisers.
Next, Fox Corporation (NASDAQ:FOXA)’s content strategy, focusing on live sports and news, sets it apart from its competitors which are more focused on scripted content. Its rights to broadcast major sports events, such as NFL games and college sports via Big Ten Network, should provide it with a competitive edge. Moreover, the company continues to expand via inorganic growth opportunities. Its recent acquisition of Credible Labs, which is a consumer fintech firm, hints at the company’s willingness to diversify and innovate beyond the core media business.
Analysts at Wells Fargo & Company raised the shares of Fox Corporation (NASDAQ:FOXA) from an “Underweight” rating to an “Overweight” rating. They upped their price objective from $29.00 to $46.00 on 16th August 2024. The stock is held by 37 hedge funds (out of 912 hedge funds tracked by Insider Monkey) with stakes worth $653.7 million as of the second quarter. In the preceding quarter, 31 hedge funds held stakes in the company.
4) Altice USA, Inc. (NYSE:ATUS)
Short % of Float (15 August 2024): 15.94%
Number of Hedge Fund Holders: 32
Altice USA, Inc. (NYSE:ATUS) operates as a telecommunication and media company. It provides digital cable television, high-speed broadband and ultra-HD video, internet, local news and voice offerings, and digital advertising solutions.
In early 2024, Bloomberg reported that criminal investigations in Portugal and France impacted this telecommunications empire. The investigations into suspected corruption, money laundering, and tax fraud led to the suspension of around a dozen executives and 60 suppliers in Portugal, France, and the US.
The company mentioned that it has become a victim of alleged wrongdoings. Portuguese prosecutors mentioned that procurement decisions that were taken at Altice Portugal were rigged in such a way that harmed the group’s own companies and competitors. However, these decisions benefited intermediaries via corruption, tax fraud, and money laundering. As a result, contracts with ~60 of the company’s suppliers globally were scrutinized. On the YTD basis, Altice USA, Inc. (NYSE:ATUS)’s stock has seen a decline of more than ~30%, and its short % of float (as of 15 August 2024) stood at ~15.9%.
Wall Street analysts believe that the new management team of Altice USA, Inc. (NYSE:ATUS), which largely hails from Comcast, is focused on improving the firm’s performance. The expansion into the B2B offerings should fuel growth prospects, with additional support likely to come from political revenue in 2H 2024. This should help achieve advertising growth. Altice USA, Inc. (NYSE:ATUS) continues to focus on making investments in AI and data to enhance capabilities and customer service.
Its efforts to improve customer experience and operational efficiency via investments in fiber expansion, mobile services, and AI build a growth story for the long term. Its proactive network maintenance and segmented go-to-market approach should result in operational improvements. Altice USA, Inc. (NYSE:ATUS) elevated its product and network quality and introduced refreshed go-to-market strategies, which should continue to gain traction.
In 2Q 2024, Altice USA, Inc. (NYSE:ATUS) achieved significant improvements in operational metrics and customer satisfaction, and growth in fiber, mobile, and B2B businesses. It also saw continued stabilization of ARPU throughout the base.
The average price target for the shares of Altice USA, Inc. (NYSE:ATUS) stood at $2.61. This is based on 9 Wall Street analysts’ 12-month price targets, which were issued over the previous 3 months. The average price target demonstrates an upside of ~18.64% from the current price of $2.20. As per Insider Monkey’s database, 32 hedge funds were long Altice USA, Inc. (NYSE:ATUS), up from 27 in the preceding quarter.
3) Shutterstock, Inc. (NYSE:SSTK)
Short % of Float (15 August 2024): 21.04%
Number of Hedge Fund Holders: 19
Shutterstock, Inc. (NYSE:SSTK) is a U.S.-based company, which is engaged in providing digital content.
Short sellers are bearish on the company’s shares as they believe that Shutterstock, Inc. (NYSE:SSTK)’s content business continues to struggle. The revenues from this business accounted for ~77% of its total revenue in 2Q 2024, raising concerns about its revenue growth outlook. Moreover, the business continues to face challenges in new customer acquisition. In 2Q 2024, revenue from its content product offering saw a decline of $17.0 million, or 9%, as compared to 2Q 2023 to $170.0 million.
Moreover, short sellers believe that the potential negative impact of the rise of artificial intelligence on Shutterstock, Inc. (NYSE:SSTK)’s business model is expected to be huge. As a result, the shares of the company saw a fall of over ~13% over the past year. Due to AI technology, there can be chances that its content becomes no longer useful, which can create further pressure on its business.
Wall Street analysts believe that the shares of Shutterstock, Inc. (NYSE:SSTK) should be able to steer through the challenging environment over the long term. These analysts believe that its acquisition of Envato Pty Ltd., which is a leader in digital creative assets and templates, should add to its growth opportunities. The acquisition expands Shutterstock, Inc. (NYSE:SSTK)’s reach in faster-growing audiences like freelancers, hobbyists, small businesses, and agencies.
The acquisition is expected to increase the company’s Content revenue from video, audio, graphics, fonts, and templates. This acquisition should add $75 million to its 2024 revenues. Moreover, the company announced the release of GenAI 3D capabilities and its partnership with Databricks. Shutterstock, Inc. (NYSE:SSTK) continues to work on simplifying its product offerings and making pricing more competitive, which might help the company recover its Content business in 2H 2024.
Analysts at Morgan Stanley upped their price objective on shares of Shutterstock, Inc. (NYSE:SSTK) from $55.00 to $58.00, giving it an “Equal-weight” rating on 23rd July. As per Insider Monkey’s 2Q 2024 database, Shutterstock, Inc. (NYSE:SSTK) was in the portfolios of 19 hedge funds.
2) Weibo Corporation (NASDAQ:WB)
Short % of Float (15 August 2024): 21.21%
Number of Hedge Fund Holders: 15
Weibo Corporation (NASDAQ:WB) operates as a social media platform for people to create, distribute, and discover Chinese language content. It provides public self-expression in real-time with a powerful platform for social interaction, and content aggregation and distribution.
As of 15th August 2024, Weibo Corporation (NASDAQ:WB)’s short percentage of float stood at ~21.21%. Most of the short sellers continue to bet against this stock as they anticipate near-term macro weakness and elevated competition over the long run. This competition is expected to further intensify as and when mobile Internet user growth matures in China. The rise of short-form video might weigh over its user growth and user engagement moving forward. As a result, some platforms can attract content creators away from Weibo Corporation (NASDAQ:WB).
There are expectations that this competition is expected to grow, which will prompt the company to invest heavily in product development, sales, and marketing. This might impact its near-term earnings and margin growth. In 2Q 2024, its net revenues came in at US$437.9 million, reflecting a fall of 1% YoY, with advertising and marketing revenues declining 3% YoY to US$375.3 million. This fall was because of a challenging macroeconomic environment.
While short sellers continue to be bearish about Weibo Corporation (NASDAQ:WB), Wall Street analysts believe that the stock trades at lower valuations and is well-placed to take off. The company’s stock trades at ~3.46x its forward earnings, which is at a discount to the sectoral average of ~5.56x. These analysts believe that short-term challenges are expected to be offset by its strong network effect, which should act as a critical growth enabler. The company creates high levels of interactions between users, which should support brands and allow them to have a better understanding of the market’s needs.
Additionally, the company continues to invest in AI technology to enhance content production and commercialization. This should support it in improving monetization competitiveness over the long term. Its AI technology, AIGC, has been approved by the government. Therefore, this should enhance content production and commercialization efficiency.
The average price target on the shares of Weibo Corporation (NASDAQ:WB) is $11.42. It has a high forecast of $17.00 and a low forecast of $8.50. At the end of Q2 2024, 15 hedge funds owned stakes in the company.
1) Vivid Seats Inc. (NASDAQ:SEAT)
Short % of Float (15 August 2024): 32.16%
Number of Hedge Fund Holders: 24
Vivid Seats Inc. (NASDAQ:SEAT) is an online ticket marketplace for connecting fans to live events and artists. The company is an official ticketing partner by brands in the entertainment industry offering tickets for sports, concerts, theatres, and comedy.
Short sellers believe that the company’s stock price is expected to struggle moving forward as a result of challenges, such as venue downsizing and event cancellations. This indicates that Vivid Seats Inc. (NASDAQ:SEAT) might face the risk of lower consumer demand. As a result, there are concerns regarding the company’s ability to meet its growth expectations for the upcoming year. Additionally, there was an increase in competitive performance marketing intensity. This might impact its ability to expand the market multiple.
Moreover, there are expectations of a downturn in the company’s activity within performance marketing channels. This can result in a decrease in its GOV and a marginal fall in revenue projections for 2024 and 2025.
That being said, Wall Street analysts are quite optimistic about the company’s growth prospects. Vivid Seats Inc. (NASDAQ:SEAT)’s loyalty program and engagement initiatives resulted in a lot of repeat orders over time. The analysts believe that a strategic focus on profitable growth and the anticipation around an improved competitive landscape in 2025 should help its stock price. Analysts are quite optimistic about its inorganic growth strategies, which should help improve margins.
For example, Vivid Seats Inc. (NASDAQ:SEAT)’s acquisition of Vegas.com and introduction of the Game Center app should act as margin-accretive strategies that can drive new and returning users with high conversion rates and strong returns on advertising spend. In 2Q 2024, the company refinanced and up-sized its term loan and was able to reduce its interest rate while bringing $125 million of cash to its balance sheet. This cash balance is expected to be deployed across share repurchases and strategic M&As. For 2024, Vivid Seats Inc. (NASDAQ:SEAT) is expecting its marketplace GOV of between $4.0 billion to $4.3 billion, with revenues expected to remain between $810.0 million to $830.0 million.
Analysts at Benchmark reissued a “Buy” rating on the shares of Vivid Seats Inc. (NASDAQ:SEAT), issuing a $15.00 price target on 30th July. By the end of 1Q 2024, 24 hedge funds included the company in their portfolios with total stakes amounting to $52.7 million.
While we acknowledge the potential of SEAT as an investment, our conviction lies in the belief that some deeply undervalued AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for a deeply undervalued AI stock that is more promising than the ones mentioned on our list but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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