HyreCar (HYRE) provides a marketplace that allows car owners to rent out their vehicles to e-hailing service providers in the United States. I am bullish on the stock. (See HyreCar stock charts on TipRanks)
Filling a Critical Gap
Instead of competing with rising powers in the peer-to-peer space, HyreCar decided to establish itself in the upstream part of the e-hailing industry. Its creative business model allows for job creation, passive income, and investment opportunities.
It's been reported that individuals earn up to $12,000 per annum in passive income by renting out their vehicles. The e-hailing industry is expected to experience a further 24.02% CAGR for the next five years, and freelancing is anticipated to make up 50.9% of the U.S. total workforce by 2027.
These factors will play into HyreCar's hands and increase user volume via its marketplace. HyreCar is early to the party in exploiting the industry's vertical supply chain and will likely experience robust growth until serious competition arises.
Emphasizing Financial Efficiency
HyreCar runs on a gross profit margin of between 23.36% and 49.40%, leading to severe earnings volatility. In an effort to enhance its profit margins, the company has appointed Serge De Bock as its new CFO.
De Bock is a former senior vice president of Ford Motor Company (NYSE:F). His track record speaks for itself, as he's formed part of a team that has lead Ford into profitability over the previous decade, after a period of sustained losses in the early 2000s.
The stock price immediately rose by 4% after the announcement, signaling investors' optimism regarding the company's emphasis on better financial efficiency.
Key Metrics
Being a growth stock, HyreCar will benefit from earnings expectations rather than price multiples such as price to earnings or price to book.
The two critical metrics to look at will be revenue growth and working capital.
Year-over-year revenue growth of 52.58% succeeds its 5-year average of 504.42%, and its working capital has grown by 355.64% over the past year, succeeding its 5-year average by 6205.19%. The importance of revenue growth is semantics, but the excess working capital at hand allows the company to expand on operations without issuing additional shares that could dilute shareholders' profits.
Investors should also consider that, looking at momentum, although the stock has gained 205% over the past year, many peaks, bottoms, and troughs have occurred.
The relative strength index of 41.33 is currently below 50.00, indicating that HyreCar is oversold and that a "buy the dip opportunity" could be on the cards.
Wall Street's Take
Wall Street analysts think the stock is a Strong Buy, with 3 buy ratings, 1 hold rating, and no sell ratings being placed. The average analyst HyreCar price target is $18.75, implying an upside of 60.7%. The highest price target ($22) was set 23 days ago by Tom White of D.A. Davidson.
Disclosure: At the time of publication, Steve Gray Booyens did not have a position in any of the securities mentioned in this article.
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