After Post-IPO Rise and Pullback, Expensify Doesn’t Look Expensive

There have been plenty of initial public offerings (IPOs) this year and there’s certainly no shortage of apps out there. Yet, you might find that Expensify (NASDAQ:EXFY) is different from the others and you may even choose to make a small investment in EXFY stock.

The Expensify (EXFY) app is shown on a smartphone screen.

Source: Piotr Swat / Shutterstock.com

To put it simply, Expensify is an expense management software provider. It can be a major time saver for businesses and their employees.

Expensify’s IPO occurred not long ago, and as we’ll see, there was an early share-price pop. However, the rally didn’t last and EXFY stock pulled back somewhat.

It’s too early to identify a definite price range for the stock, so caution is advised. Still, we can track Expensify’s progress so far while also discovering what makes this company unique and primed for growth.

A Closer Look at EXFY Stock

On Nov. 9, Expensify announced the pricing of its IPO at $27 per share. This happened after the company first established a range of $23 to $25, and then $25 to $27 per share. In other words, EXFY stock was getting more expensive even before it started trading publicly on the Nasdaq on Nov. 10.

That first day, Expensify shares opened at $39.75 and closed the session at $41.06. Obviously the stock was off to a strong start. It even managed to reach $50 by the end of November. However, it’s difficult to maintain that growth rate. In the first few days of December, EXFY stock retraced to $35 and change.

For the time being, investors should expect volatility as Wall Street figures out the right price for Expensify shares. Consequently, it’s not advisable to load up on the stock. If you like the company’s future prospects, though, it’s fine to take a small position.

A Popular “Superapp”

In the press release accompanying Expensify’s IPO pricing, the company described its platform not just as an app, but as a “superapp.”

So, what’s “super” about it? To sum up the Expensify platform, it’s designed to help individuals and businesses simplify the way they manage money. It’s quite popular, as more than 10 million people use Expensify’s features. These include corporate cards, expense tracking, next-day reimbursement, invoicing, bill pay, and travel booking.

Thus, Expensify makes money management easier for businesses and for the workers who have to track and report where the capital’s going. This really could be a game changer for an important niche market.

As Expensify CFO Ryan Schaffer explains, “Expense reporting for the typical business hinges on ’email, Excel, and a manila folder’ with employees ‘scanning receipts on a flatbed scanner’ before submitting them to the boss.”

Revenue Is Growing Quickly

In contrast, Expensify’s technology-driven app enables employees to quickly take photos of receipts from their phones. They can then submit a report that gets automatically emailed to the boss for approval and quick reimbursement. That’s great, but informed investors will want to know if this platform is actually lucrative for Expensify.

Fortunately, there’s data to show that simplifying the expense-reporting process can be a financially viable business model. According to the company’s prospectus, Expensify’s revenue has grown from $53.9 million in 2018 to $80.5 million in 2019, and then to $88.1 million in 2020.

Moreover, Expensify generated $65 million in revenue in just the first six months of 2021. That’s a substantial increase over the $40.6 million generated during 2020’s first six months.

Interestingly, Expensify’s head count has remained fairly consistent, with 134 employees as of June 30, 2020, and 140 employees as of June 30, 2021. It’s nice to know that Expensify is willing to stay small, which can help the company to be more profitable in the future.

The Bottom Line

It’s too early in the game to determine a price range for EXFY stock. Nevertheless, it’s not a bad idea to own a few shares of the stock. Expensify’s app really is “super” in some ways, and the company is growing its revenue quickly.

So, don’t be afraid to give this fresh IPO stock a chance as more businesses are likely to discover the benefits of Expensify’s expense-reporting platform.

On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

David Moadel has provided compelling content – and crossed the occasional line – on behalf of Crush the Street, Market Realist, TalkMarketsFinom Group, Benzinga, and (of course) InvestorPlace.com. He also serves as the chief analyst and market researcher for Portfolio Wealth Global and hosts the popular financial YouTube channel Looking at the Markets. 


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