Why ShiftPixy Stock Needs to Cool Off Before It’s Buy-Worthy


PIXY stock - Why ShiftPixy Stock Needs to Cool Off Before It’s Buy-Worthy

Source: Samuel Mann via Flickr (Modified)

In today’s ultra-competitive technology sector, you’re either a disruptor or the disrupted. Few understand this concept better than ShiftPixy (NASDAQ:PIXY). As an employment platform specifically designed for the “gig economy,” PIXY stock has tremendous upside potential. What I just stated is no hyperbole. To close out the prior week, PIXY stock launched into orbit with a nearly 69% swing.

Of course, investors are right to ask whether such price explosions are sustainable. I’m going to answer this question in-depth later because PIXY stock is a nuanced investment. But it’s safe to say that ShiftPixy has set foot on the industry of tomorrow. While it’s going to suffer the growing pains involved in being one of the first to market, in the longer run, the company should make out well.

To understand ShiftPixy, you must first appreciate the gig economy. In a dry, technical sense, this concept refers to independent contractors: people who provide work services to corporations, but are not considered employees. But this term could describe anyone, from an IT specialist to a plumber. What makes the gig “economist” so special?

The justification for the term refers to a broader trend in the workforce, especially among millennials. Many younger workers find the traditional confines of corporate America restrictive, and wish to branch out on their own. According to Harvard Business Review’s extensive study on the subject, several freelancers reported increased satisfaction with their work.

As with any life choice, pros and cons exist. The primary setback is consistency of work, or lack thereof. ShiftPixy solves that problem by connecting companies and freelancers, which is why PIXY stock is on fire.

Can PIXY Stock Maintain This Momentum?

Not only does ShiftPixy play into millennial life and work culture, it’s potentially the ultimate middleman killer. Staffing agencies make significant profits connecting transitioning workers with companies seeking non-permanent solutions. Common reasons include covering for extended vacations, or for medical-related circumstances like pregnancy leave.

Workers who need a job receive one (albeit often temporarily), and a hiring company fills a need. On paper, it’s a win-win. But from the hired person’s perspective, they’re getting fleeced by the staffing agency, which obviously doesn’t operate for free. Plus, staffed jobs aren’t always the most glamorous (believe me, I would know!).

ShiftPixy takes care of both issues by offering a cost-effective platform, as well as tech-centric opportunities. The advantage for ShiftPixy, and by logical deduction, PIXY stock, is that all parties embrace the gig economy. More often than not, companies who are used to ShiftPixy’s services are forward-thinking, and probably disruptors in their own industries.

Interestingly, publicly traded staffing agencies have had mixed performances in 2018. The front-runners are kforce.com (NASDAQ:KFRC) and Robert Half (NYSE:RHI). Both shares are firmly in double-digit territory year-to-date. However, Manpower Group (NYSE:MAN) and Kelly Services (NASDAQ:KELYA) are down double-digits, and the former is down sharply.

I don’t think PIXY stock represents an existential crisis right now for the staffing-agency sector’s alpha dogs. Especially for an organization like Robert Half that leverages extensive professional networks, a smaller firm isn’t going to trouble it. Hence, I’m not gung-ho on ShiftPixy. If you want to wait out this recent valuation burst, and look for a better price point, I encourage this.

But I also don’t think you can ignore PIXY stock. Eventually, the gig economy will be the new norm.

How Should Investors Proceed With ShiftPixy?

As much as I want to buy PIXY stock, I just don’t buy into 69% moves. Granted, Wall Street found the swing well-justified. In its recently released third-quarter fiscal 2018 earnings report, ShiftPixy achieved over 100% growth in both gross billings and revenues.

More importantly, the number of workers using the ShiftPixy platform jumped to 7,648. In the year-ago quarter, the figure was just under 4,000. Clearly, more people are buying into the gig economy, and it’s generating serious results.

Just be aware that PIXY stock is a work in progress. Fundamentally, I love its zero-debt balance sheet. On the other hand, the company bleeds money, suffering negative earnings over the past two years. Rising costs and expenses aren’t helping matters.

But when the gig economy has 150 million participants in North America and western Europe, one thing is clear: the longer-term odds strongly favor ShiftPixy. A recent article from The Manila Times indicates that the trend is steadily impacting Asia.

Which is to say that ShiftPixy will decisively (and consistently) have its day. I’m just not convinced that it’s today. Wait for a meaningful pullback in PIXY stock before considering a heavy-handed position.

As of this writing, Josh Enomoto did not hold a position in any of the aforementioned securities.

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