Technology
Prediction: This Software Stock Will Be the Best Performer the Rest of 2024
Published:
24/7 Wall St. Insights
- This year has been a tough one for software stocks in general.
- However, Wall Street has high expectations for GigaCloud Technology Inc. (NASDAQ: GCT).
- Shares are projected to more than double in the coming year.
- Also: Discover the next Nvidia.
Big tech stocks may have been driving the bull market, but the artificial intelligence tide has not necessarily lifted all boats. Unlike semiconductor and other hardware stocks, 2024 has been tougher on software stocks overall. There are some bright spots, however, particularly in the cloud infrastructure and cybersecurity arenas. So where should investors seeking opportunities in the industry be looking now?
Let’s take a look at software stocks for which Wall Street analysts have big expectations for the rest of the year and into the next.
| Stock | Mean Target | Upside |
| BlackBerry Ltd. (NYSE: BB) | $4.75 | 96.3% |
| Core Scientific Inc. (NASDAQ: CORZ) | $16.31 | 54.3% |
| Five9 Inc. (NASDAQ: FIVN) | $53.97 | 53.3% |
| GigaCloud Technology Inc. (NASDAQ: GCT) | $53.96 | 141.5% |
| Ibotta Inc. (NYSE: IBTA) | $97.56 | 101.0% |
| LiveRamp Holdings Inc. (NYSE: RAMP) | $40.94 | 65.3% |
| Pagaya Technologies Ltd. (NASDAQ: PGY) | $25.00 | 90.5% |
So far as Wall Street is concerned, GigaCloud Technology has the greatest potential upside of these software stocks in the coming year. Does that mean that its shares are undervalued? Or perhaps one overzealous analyst has skewed the mean?
Why Invest in GigaCloud Technology?
GigaCloud Technology stock is down over 51% from its 2022 initial public offering (IPO) share price. Shares were last seen trading near $23 apiece. Note that they hit a post-IPO high above $45 apiece earlier this year.
The company has a mission to empower the future of global e-commerce landscape. It makes use of AI technology to collect real-time market trend data to provide market analysis, optimize inventory levels, and analyze customer behavior. For the past two years, it has won Stevie awards from the American Business Awards for its achievements in growth. It was also a Best in Biz International award winner in 2023.
The company does not offer a dividend. Yet, despite the recent retreat, the stock has outperformed the broader markets, both in the past year and year to date. The question is whether the shares are poised for a rebound. Let’s have a look at what Wall Street expects.
GigaCloud Technology, the Company
This software infrastructure company provides end-to-end business-to-business e-commerce solutions for large parcel merchandise in the United States and internationally. Its GigaCloud Marketplace integrates product discovery to payments to logistics tools into one easy-to-use platform. Its marketplace connects manufacturers primarily in Asia with resellers in the United States, Asia, and Europe to execute cross-border transactions across furniture, home appliance, fitness equipment, and other large parcel categories. The company was formerly known as Oriental Standard Human Resources Holdings. It changed its name in February 2021.
GigaCloud Technology is based in El Monte, California, which is in Los Angeles County. The company was incorporated in 2006. In August of 2022, it went public. The company competes with or is similar to Affirm Holdings Inc. (NASDAQ: AFRM), Block Inc. (NYSE: SQ), and Okta Inc. (NASDAQ: OKTA). Amazon.com Inc. (NASDAQ: AMZN) is a much bigger rival.
This month, the company reported disappointing quarterly earnings. It also announced the resignation of its chief financial officer and named an interim replacement. Earlier in the summer, the stock joined the Russell 2000 Index, and the company’s founder and CEO was named Entrepreneur of the Year. Note that GigaCloud topped expectations on the top and bottom lines in its first-quarter report.
GigaCloud Technology, the Stock
The share price has pulled back more than 37% in the past 90 days. Meanwhile, the Nasdaq is up over 7% or so in that time. However, the $53.96 consensus price target would be an all-time high. The consensus recommendation of analysts has been to buy shares for at least two months. Lake Street initiated coverage with a Buy rating last month. Maxim did the same in May. Back then, shares were changing hands for around $30 apiece.
Institutional investors hold about 38% of the shares. BlackRock and Morgan Stanley have notable stakes. More than 21 million shares, or over 22% of the float, are held short. Note that, since the beginning of April, CEO Wu Lei has reduced his stake from over 1.2 million shares to about 100,000.
Wall Street expectations for where the stock goes in the next 52 weeks vary but are all very positive. Even the lowest target signals that the share price will almost double in the next 52 weeks.
| Low target | $42.00 | 88.0% |
| Mean target | $53.96 | 141.5% |
| High target | $69.00 | 208.9% |
Despite the optimism, GigaCloud Technology does face risks. Ongoing inflation and recession fears may mean that customers delay acquiring the large parcel goods the company specializes in. Rising ocean freight rates could also put pressure on profit margins.
Furthermore, the company was the target of a critical short seller report earlier this year questioning some of its business methods. GigaCloud called that report misleading, inaccurate, and defamatory.
Wall Street does not seem too concerned, though, at least not in the short term.
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