Is IZEA Worldwide Stock a Buy?

Is IZEA Worldwide stock a Buy? IZEA Worldwide Inc (NASDAQ:IZEA) is an influencer marketing company that facilitates brand and content creator transactions via an online marketplace. The company works with creators of text, video, and visual images to be distributed through websites, blogs, and social media channels.

The company features a marketplace platform providing deep research into statistics and financial data around influencer marketing. This is expected to be a $13.8 billion business for the calendar year 2021, which is more than 10x growth from 2016.

With the economy moving the direction it is, influencer marketing could grow by another 10x even faster. It’s just a question of whether IZEA Worldwide can pick up some of that shine and grow alongside it. That’s easier said than done, and it had a rocky road toward becoming the nearly-$200 million company it is today.

IZEA Worldwide stock has been volatile leaving investors jittery about the long haul prospects. To get a sense of where it’s going we need to look at where it’s been.

IZEA Is A Pioneer In Influencer Marketing

IZEA Worldwide is one of the earliest pioneers of modern influencer marketing. Back in the 20th Century, brands spent much of their marketing and advertising budgets on product placements on radio, TV, movies, magazines, and newspapers.

The internet age changed the game, and a YouTuber or TikTok star can influence people with as big and engaged of a fanbase as any Hollywood celebrity. Over the past decade, there was a shift away from those traditional routes toward influencers.

Because of that, the company booked $24 million in gross billings in 2020 alone. Brands often look for micro-influencers between 10,000 and 100,000 followers, and it’s best that they’re on buzzy platforms like TikTok instead of controversial ones like Parler or even Clubhouse, both of which have questionable policies on hate speech.

IZEA helps both brands and influencers navigate the murky market to form solid connections that produce great results for advertisers and influencers. So what do its financials look like?

IZEA Worldwide Revenues And Share Price Growth

We discussed above, but it’s worth repeating that IZEA Worldwide had $24 million in revenue in 2020 from its 940,000 registered users. It handled about 3.9 million marketplace transactions with its 100-person staff, suggesting cost efficiencies are well established.

Investors were pleased with the company’s quarterly earnings reports throughout the pandemic, and IZEA share price reflects that. It rose from under $1.00 to over $5.00 per share at one point.

The company’s Unity Suite could fuel a lot of momentum to sustainable push it above the $200 million market valuation mark. If it pulls that off, the old high share prices could certainly be eclipsed.

Of course, those former high price levels were a long time ago, and the rise of influencer marketing didn’t correlate with a commensurate increase in IZEA’s market cap.

What’s Stopping IZEA Getting More Traction?

A threat to IZEA Worldwide is the same issue that stalled Clubhouse – today’s influencers and creators are a lot more business savvy. Top content creators aren’t willing to slave away for peanuts, and they generally prefer to avoid exclusivity deals after having seen what happened to early YouTube, Vine, and other online stars.

Online is the new Hollywood, and today’s biggest movie stars, rock stars, and more come from the internet. People can create anywhere these days, and there are no limits to how successful you can get through which paths.

Could IZEA be cut out of the equation? It hasn’t been able to reach its 2012 stock prices, so investors have reasons to be wary. Its platform is a great help that should be able to draw more brands and influencers in, but two-sided marketplaces are notoriously difficult to create because both stakeholders need to succeed for the platform to scale.

Can IZEA Worldwide Competitors Win?

Although it’s an early pioneer, the influencer marketing segment blossomed over the past decade. There are plenty of competitors to IZEA Worldwide, such as PDF Solutions, Cass Information Systems (CASS), Digi International, and Thermon Group.

In addition, platforms like Clubhouse are attempting a “Creator First” approach which vertically integrates them into influencers’ business like a music business 360 contract. This could be a new dawn in which the influencer and traditional celebrity worlds collide.

Moving forward, content creators online will face much of the same struggle documented throughout hip-hop music. In the early days, rappers expressed disdain for the struggle of fighting for a voice in an established industry. Rocking the boat comes with high risk.

Is IZEA Worldwide Stock a Buy? The Bottom Line

IZEA Worldwide is an influencer marketing marketplace that promises to connect brands with influencers and creators across a broad range of disciplines and platforms. This could position it as one of the most innovative companies in the world, but after a few decades it still hasn’t established a model that has scaled as much as early investors may have hoped.

It’s an impressive small-cap company though, and it has a solid tech platform that it can leverage to build the next generation of influencers. Of course, plenty of other companies are on the same path – Twitter (TWTR), Clubhouse, and Spotify (SPOT) are just a few who are trying to work directly with influencers.

Either way, it’s looking more and more like yesterday’s Hollywood business is now applicable to the internet, and influencers are finding new pathways to success.

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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.