BlackLine the Next Great Fintech Play
An area that will continue to capitalize on the growing importance of technology innovation is the financial technology (fintech) segment.
I have in the past provided numerous stocks that use technology in financial applications. This area is picking up steam and will be a game changer going forward.
In the small-cap fintech area, a rapidly growing company that offers investors an intriguing opportunity is BlackLine, Inc (NASDAQ:BL), which was founded in 2001 but only became a publicly traded company in October 2016 at $17.00.
BL stock traded as high as $40.28 in July, prior to the subsequent retrenchment to below $30.00 in August. The downside move was met with decent buying support, followed by another attempt at $39.0 that failed to hold.
Chart courtesy of StockCharts.com
BlackLine is currently in a sideways holding pattern at around $32.00 to $36.00 on neutral relative strength.
My view is BL stock could rally back towards $40.00 and above if the company continues to deliver on its strong estimates.
The business of BlackLine is on the development of a cloud-based platform that helps companies with the automation of their accounting and finance processes.
BlackLine counts in excess of 2,000 clients in over 130 countries serving over 178,000 users on the platform. The customer base is diversified and includes small to large multinationals.
My Fundamental Bull Case for BL Stock
While the financial history is limited, the outlook for BlackLine looks strong. Revenues are estimated to rise 40.9% to $174.48 million in 2017 and 28.6% to $224.36 million in 2018. (Source: “BlackLine, Inc. (BL),” Yahoo! Finance, last accessed December 28, 2017.)
And as is the case with many small technology companies, profits are not yet part of the picture.
BlackLine is set for losses of $0.10 per diluted share in 2017, but narrow this down to a loss of $0.04 per diluted share in 2018. There is a high estimate calling for profits of $0.04 in 2018. The fact the consensus earnings per share has been rising for 2017 and 2018 is bullish and could be followed by higher stock prices.
So far, BlackLine has been delivering strong results since becoming a public company, with five straight quarterly beats averaging around 45%.
In my view, the growing adoption of fintech will provide the tailwinds for the segment going forward, which should help BlackLine stock.
BL stock is also heavily purchased by institutional investors to the tune of 80.5%. Two major investors are private equity firm Silver Lake Group, LLC, holding 15.19 million shares, or 28.74% of the shares; and ICONIQ Capital, LLC, with a 15.45% stake. (Source: Ibid.)
The fact that pro money follows BlackLine stock is bullish and provides accountability for the company to deliver to shareholders.