Shares of EverQuote, Inc. (NASDAQ: EVER) improved over 710% in the past year to a record high of $47.44 on Friday. Investors remained bullish about the company’s future as the income tax return filing deadline continues to increase the traffic to the online marketplace for insurance. Meanwhile, the company is set to release its fourth-quarter earnings results next week.
The company’s success depends in part on the growth of its consumer traffic as measured by quote requests. Historically, EverQuote has increased consumer traffic to its marketplace by expanding existing advertising channels and adding new channels. The consumer traffic is expected to continue rising backed by features leveraging and growing data assets of its platform.
The company generates revenue by selling consumer referrals to insurance provider customers, consisting of carriers and agents, and indirect distributors in the US. However, the bottom line will continue to be impacted by advertising expense that consists of variable costs related to attracting consumers to its marketplace.
EverQuote has the ability to lower advertising expenses but this would likely result in a decline in quote requests. This is likely to stand as a hindrance to its long-term goal of increasing consumer traffic. The company believes it has the opportunity to increase the number of referrals per quote request while increasing the binding rate per quote request, which would allow the company to increase revenue at a low incremental cost.
For the fourth quarter, the company is expected to report a narrower loss backed by higher top-line growth and leverage of costs and expenses. EverQuote expects revenue in the range of $67-69 million and adjusted EBITDA in the range of $2-3 million for the fourth quarter.
The company’s shares remained above the 50-day moving average of $36.59 and the 200-day moving average of $28.22. The price/earnings-to-growth (PEG) ratio is at negative 5.10 and the forward price-to-earnings (P/E) is at negative 301.60 as the company incurred loss during the year. Investors remained unalarmed by the negative PEG ratio and P/E as the company is just a year old.
The company’s stock is likely to head higher backed by its continued investments in data sciences, artificial intelligence, and machine learning technology. This is likely to result in significant margin improvements derived from gains in marketing efficiency, consumer conversion rate, and increased carrier monetization.
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