1. Ibotta Inc. (NYSE:IBTA)
YTD returns: -49%
Potential Upside: 62%
Number of Hedge Fund Holders: 15
Ibotta Inc. (NYSE:IBTA) is a consumer e-commerce technology firm that focuses on offering cashback and digital rewards for everyday purchases. Utilizing its mobile app and browser extension, the company partners with retailers, brands, and e-commerce platforms to provide cashback deals on a variety of items such as groceries, apparel, electronics, and more.
On Thursday, February 27, Ibotta Inc. (NYSE:IBTA) saw its shares drop sharply by 46%, which contributed to a year-to-date decline of 49%, primarily due to disappointing quarterly performance. In Q4 2024, the company reported total revenue of $98.4 million, a 1% decrease year-over-year and below its own guidance of $100–$106 million. Additionally, adjusted EBITDA came in at $27.8 million, falling short of its guided range of $30–$34 million.
The guidance for Q1 2025 raised further concerns. The company expects revenue to be between $80 and $84 million, indicating no growth compared to Q3 2023 figures, at the mid-point of the range. Moreover, the projected EBITDA margin is just 15%, a significant drop from its usual 28%–30%, which implies that costs are rising faster than revenue. Management also pointed to near-term supply constraints—specifically, a shortage of available offers for redeemers—that could negatively impact revenue. Consequently, the focus is now on reducing costs and enhancing sales execution to rekindle growth.
In light of these results, analysts have revised their earnings estimates and lowered their price targets on Ibotta Inc. (NYSE:IBTA). However, the consensus one-year median price target still suggests a potential upside of 62% from current levels. For instance, an analyst at Evercore ISI reduced his price target from $97 to $56 while maintaining an Outperform rating.
While we acknowledge the potential of IBTA to grow, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than IBTA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 20 Best AI Stocks To Buy Now and Complete List of 59 AI Companies Under $2 Billion in Market Cap.
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