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Riskified Ltd (RSKD) is an payment fraud prevention company that provides e-commerce payment solutions. It utilizes artificial intelligence (AI), machine learning algorithms, and data analytics to deliver payment insights, enabling merchants to accept or decline transactions. The company also offers a Chargeback Guarantee which certifies the legitimacy of merchant payments. Riskified caters to direct-to-consumer brands, omnichannel retailers, online marketplaces, and e-commerce service providers, with clients including Booking.com (BKNG), Shein, Prada, Wayfair (W), and GoPro (GPRO).

Founded in 2012, Riskified went public in 2021. The company is based out of both Tel Aviv and New York, with a modest market cap of $1.1 billion.

RSKD shares have gained 34.2% this year, outperforming the large-cap benchmark S&P 500 Index ($SPX), which has added 18.5%. The stock is trading about 5% away from its newly set annual high of $6.64.

Riskified Reports Solid Q1 Results

The fintech company released its most recent quarterly results on May 15, which sparked a single-day gain of 15.3% in its stock. The company posted Q1 revenue of $76.4 million, representing an 11% rise YoY, while its adjusted EBITDA came to $2.8 million.

Riskified bought back 6.4 million shares during Q1, and also announced a new share buyback authorization worth $75 million for future repurchases. It ended the quarter with a cash balance of $455 million and zero debt in its books, with free cash flow achieving record levels during the quarter.

Management expects revenue between $323 million and $335 million for the full year, with adjusted EBITDA now expected between $12 million and $18 million. The company is targeting $30 million in free cash flow.

RSKD Gets a Single “Sell” Rating

Analysts have a consensus “Moderate Buy” rating on RSKD stock, with a mean price target of $6.75. That suggests an expected upside of 5.8% from current levels.

Out of the 9 analysts tracking the small-cap stock, there are three “Strong Buys,” 5 “Holds,” - and one brand-new “Strong Sell” rating, courtesy of Goldman Sachs (GS).

In a note last week, analyst Will Nance cut the stock to “Sell,” warning that “tougher comps into 2H24 in the company’s ticketing and events and travel verticals” could be a headwind for RSKD. However, Goldman believes that the biggest risk could actually be the 2H guidance from Riskified, which bakes in expected improvements in macro trends - and gives the company much less leeway to surprise Wall Street to the upside.

“The biggest risk to our view is continued margin expansion and the company's impressive track record of holding costs flat to down for the last two years, which means that even the lower level of revenue growth over the next year will drive solid margin expansion,” explained Nance.

The analyst has a $6 price target for RSKD, representing a discount of more than 6% to current prices.

On the date of publication, Ruchi Gupta did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.