AudioEye Stock Forecast

Audioeye Inc (NASDAQ:AEYE) helps companies obtain immediate accessibility to comply with the Americans with Disabilities Act (ADA) and Web Content Accessibility Guidelines (WCAG). This makes it a useful technology company with business sustainability moving forward.

But what’s the AudioEye stock forecast? What we can do is look at the company’s fundamentals to compile an investment thesis. Here we examine AudioEye as a company, its leadership, earnings, and risks in the market.

AudioEye Helps Disabled Individuals Get Online  

AudioEye is a Tucson, Arizona-based company that improves access to the web for people with disabilities using advanced technology and expert collaboration. Approximately 15 percent of the world’s population (~1 billion people) are disabled, according to the World Bank. And that can limit one’s access to the internet.

You may think about adding a wheelchair ramp in your office building, but the digital experience also requires certain accommodations. Everything from a smartphone to Netflix (NFLX), YouTube, video games, and Clubhouse work differently for people with hearing or vision impairments. And others have functional disabilities that require special tools to even use the devices themselves.

AudioEye’s stated company mission is to “eradicate every barrier to digital access.”

The company was founded in 2005 and grew to become a robust digital accessibility platform. It has patented automation and AI built with the input of IAAP-certified accessibility professionals. The firm’s C-suite includes CEO David Moradi, CFO Sach Barot, and President Dominic Varacalli. Moraldi also sits on the Board with Executive Chairman Dr. Carr Bettis.

It’s integrated into the biggest web development and hosting platforms, including BigCommerce, Drupal, GoDaddy, Hubspot, Shopify, Magento, Joomla, Wix, WordPress, and Squarespace. And with the increasing push to digital, the company experienced a revenue boost after the COVID-19 outbreak.

AudioEye Revenues Are Growing Rapidly

AudioEye’s annual report showed total revenue increased 90 percent from the prior year. The company registered a record $5.6 million in earnings in the fourth quarter alone, an increase of 57 percent over the prior year.

The company has a recurring revenue model that increased to $1.9 million per month by the end of 2020, compared to under just under $1 million per month in September 2019.

The growth and sustainability of this recurring revenue stream is what will ultimately determine the share price trajectory over the next decade.

It fueled a record $20.5 million in revenue for the full year 2020, compared to $10.8 million in 2019. The company’s 2019 revenue is also a 90 percent increase from $5.7 million for 2018. This means in a two-year period at the end of the decade, the company grew to the point that its 2018 full-year revenue nearly equaled Q4 2020 revenue.

A growth trajectory like this could be curtailed in the future, but it still shows how much more sales volume the company can sustain. By December 31, 2020, AudioEye had 32,000 customers, which is over 350 percent growth from the prior year.

This customer base can grow earnings and investor returns over time, so long as the company continues to generate recurring revenues from its existing customer base while expanding both horizontally and vertically.

AudioEye Earnings Set To Turn Positive 

AudioEye spent heavily in 2019 on expanding its sales and marketing teams, which gave the company a larger customer base to scale its automated technology. This gave the company a gross profit of about 59 percent for that year, and it’s improving operating margins through 2021.

For the full year 2020, operating expenses of $21.6 million represent a 53 percent increase from the prior year. However, gross profits increased to 71 percent of total revenue. As the decade moves forward, the company’s investment in automation should pay off with higher margins.

The company reiterated its full-year 2021 guidance at around $30 million, which would be the same dollar value increase of $10 million from the previous year. However, the growth percentage would “only” be 50 percent, versus 100 percent in the previous year. This slowdown in growth is one risk to look out for, but it’s not the only one of concern for investors.

AudioEye Stock Risks

Although the company is reporting continued growth, some bearish analysts point to problems in the company’s internal controls. In fact, AudioEye CFO Sachin Barot is stepping down when his contract expires in May 2021, and the company is seeking a replacement. In fact, much of the founding team stepped down by this point.

Despite generating profits, the company continues operating at a net loss to shareholders, which equated to -$0.97 per share in 2019 and -$0.77 per share in 2020. This shows a high level of risk for investors, especially considering the stock is coming off all-time highs in 2021.

Bearish analysts believe the company’s intrinsic stock price is under $10.00, although it hit a high of $44.37 in 2021. This leaves a grim AEYE stock forecast for the next five years.

AudioEye Stock Forecast

Although AudioEye grew tremendously in the recent past, there are reasons to be cautious. For one, the company is spending less on R&D than its competition. This means the lower stock forecasts could be correct, and today’s investors will be in for a long and bumpy ride over the next five years.

The company continues spending heavily on sales and marketing while leaving investors with losses per share as the stock price skyrocketed in the pandemic economy.

As the economy shifts back to normal, AudioEye could find itself in the crosshairs of competitors. It needs to continue providing value as its growth rate slows, and the R&D for those necessary features should already be underway. If the company’s new management isn’t careful, it could lose some of the competitive advantages it gained from automation.

Nevertheless, analysts’ expectations are largely bullish with a consensus estimate of $38 per share representing fair market value.

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The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.