Is Cricut Stock A Buy?

Cricut (CRCT) went public on March 25, 2021 after two years of strong profits. The company has been making products for home crafting since 1969. Today, it’s known for its computer-controlled cutting machines that give crafters exceptional control over designs.

The company also has proprietary software that makes it possible for crafters to create unique designs or tap into a broad library of images available through partnerships with brands like Disney (DIS), Sesame Street, DC Comics, and Pixar.

When Cricut went public, its shares opened at $18. The stock quickly gained momentum and peaked at $23.34 on April 19. The market made a slight correction over the next few days but the stock quickly rebounded to a price of about $23 per share.

Cricut’s recent success has been driven by increased interest in crafting. Covid-19 forced most people to change their lifestyles significantly. Without opportunities to socialize safely, many people turned to crafting as a hobby they could enjoy at home.

Stimulus payments from the U.S. government also made it easier for households to purchase popular Cricut machines, including the Cricut Explore Air 2 and Cricut Maker.

Given Cricut’s recent shift from a private company to a publicly traded corporation, investors do not have a lot of the information they might want to purchase stock in the company. What Cricut has revealed, however, shows that it likely has a promising future as an affordable investment opportunity with plenty of room for growth.

Cricut Vs Silhouette: What Makes It Better?

From a consumer perspective what makes Cricut attractive vs the competition is it: 

• Sells a product that appeals to many people looking for new hobbies during the pandemic.
• Does not have many competitors that make similar machines for home crafting.
• Managed to become a publicly traded company before its competitors.
• Has partnerships with exceptional brands that appeal to children and crafters who want to share their work with friends and family members.
• Sells its cutting machines, software, and materials at highly competitive prices.

Whether Cricut can retain these competitive advantages relies on factors such as whether people continue crafting after they receive Covid-19 vaccinations and the company can continue to compete against new competitors that recognize opportunities in the growing market for home crafting.

Will Cricut Revenues Increase?

Cricut has revealed at least two years of financial information that show the company has growing revenues. In 2019, its revenues grew by 49%. In 2020, the company nearly double its revenues with 97% growth.

Most analysts cite the high growth rate as stemming from increased interest in people looking for hobbies during Covid-19 restrictions.

At What Rate Are Cricut Earnings Growing?

Unless a new variant of Covid-19 emerges and proves itself immune to the current vaccinations, Cricut earnings will likely decrease after 2021.

Most analysts, however, expect that the company will remain popular and profitable. Now that people have learned how to use the machines and started crafting more, they will probably continue the hobby.

The consensus estimates predict that the earnings growth for Cricut will probably fall to 20% per year after 2021. 

However, any number of events could lead to continued growth. A new variant that forces the government to release more stimulus money to consumers, for example, could increase Cricut’s earnings growth beyond the 97% it achieved in 2020.

Assuming that public health official can contain the virus and bring down infections, though, investors should expect Cricut earnings to slow considerably. Still, the company will likely remain competitive and profitable over the foreseeable future.

Cricut Management Quality

Cricut has experienced some growing pains. Heightened demand appears to have created some inner turmoil. According to Glassdoor, some employees report that managers do not provide constructive feedback that helps them do their jobs better in the wake of increased customer demands.

Cricut’s executives may need to review their managers to ensure the company has a culture and the processes needed to continue growing. After all, employees are the connection between the firm’s products and customers.

For now, investors should have mild concern about the quality of Cricut’s management. Instead of avoiding the stock, they should pay close attention to how the company evolves over the next few months as it adjusts to its role as a publicly traded corporation.

Will CRCT Share Price Go Up?

At the moment, Cricut doesn’t have any significant headwinds to worry about. Some investors worry, however, that a vaccinated population will find home crafting less interesting than a population of people that feels unsafe leaving enjoying social activities.

There is a chance that people who started crafting during the pandemic will continue with their hobby. They might even purchase new products released by Cricut. If this happens, then the company should continue earning profits, making it a successful stock for investors.

It’s also possible that many crafters could have the opposite reaction as the economy reopens and they feel comfortable gathering with family, friends, and strangers.

As social activities return, people might stop purchasing Cricut products. Even if they continue crafting, they might not feel that they need to buy new products released by Cricut.

The company can make money selling accessories, but it probably cannot thrive without selling its cutting machines.

Is Cricut Stock A Buy? Conclusion

Should you part with your money to buy Cricket shares? That largely depends on your investment goals and how much time you want to spend managing your portfolio.

Cricut stock has upside potential. The company as plenty of room to grow—at least in the short term. If all goes well, share prices could grow quickly. Even continued growth at 20% should add value to any portfolio’s long-term performance.

Buying shares does come with risk, though. If people lose interest in Cricut’s products and services after the pandemic ends, CRCT share price could falter. Anyone who invests heavily in the company needs to keep a close eye on how Cricut performs over the rest of the year.

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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.